# Real estate in China

Real estate in China is developed and managed by public, private, and state-owned red chip enterprises.
In the years leading up to the 2008 financial crisis, the real estate sector in China was growing so rapidly that the government implemented a series of policies—including raising the required down payment for some property purchases, and five 2007 interest rate increases—due to concerns of overheating. But after the crisis hit, these policies were quickly eliminated, and in some cases tightened. Beijing also launched a massive stimulus package to boost growth, and much of the stimulus eventually flowed into the property market and drove prices up, resulting in investors increasingly looking abroad. As of 2015, the market was experiencing low growth and the central government had eased prior measures to tighten interest rates, increase deposits and impose restrictions. By early 2016, the Chinese government introduced a series of measures to increase property purchases, including lower taxes on home sales, limiting land sales for new development projects, and the third in a series of mortgage down payment reductions.

## Background

With the exception of rural land (which is owned collectively by rural villagers) land in China is state-owned.$^{:165}$ The state leases the right to use land for periods of time which vary based on use: industrial land can be leased for 30 years, commercial land for 40 years, and residential land for 70 years.$^{:165}$ Traditionally, the right to use industrial land was sold at a discount while commercial and residential real estate prices were determined by the market.$^{:165}$
Rural land is collectively owned and leased to individual households.$^{:197}$ Rural land is broadly categorized as either farmland, homestead, or other construction land.$^{:197}$

## History

The real estate market began to develop in earnest after 1998.$^{:64}$
As of 2010, China's real estate market is the largest in the world. According to Bloomberg Economics estimates, the sector contributed to about 19% of China's GDP in 2024, down from a peak of 24% in 2018. According to the National Bureau of Statistics, the share of real estate and related industries as a share of China's GDP dropped from 14.45% in 2021 to 12.94% in 2024, while the share of real estate alone dropped from 7.7% to 6.27%.
As of 2023, real property accounts for 60% of Chinese household assets.$^{:161}$

### Property bubble, 2005–2011

The Chinese property bubble was a real estate bubble in residential and/or commercial real estate in China. The phenomenon has seen average housing prices in the country triple from 2005 to 2009, possibly driven by both government policies and Chinese cultural attitudes.
* Tianjin High price-to-income and price-to-rent ratios for property and the high number of unoccupied residential and commercial units have been held up as evidence of a bubble. Critics of the bubble theory point to China's relatively conservative mortgage lending standards and trends of increasing urbanization and rising incomes as proof that property prices can remain supported.
The growth of the housing bubble ended in late 2011 when housing prices began to fall, following policies responding to complaints that members of the middle-class were unable to afford homes in large cities. The deflation of the property bubble is seen as one of the primary causes for China's declining economic growth in 2012.
2011 estimates by property analysts state that there are some 64 million empty properties and apartments in China and that housing development in China is massively oversupplied and overvalued, and is a bubble waiting to burst with serious consequences in the future. The BBC cites Ordos in Inner Mongolia as the largest ghost town in China, full of empty shopping malls and apartment complexes. A large, and largely uninhabited, urban real estate development has been constructed 25 km from Dongsheng District in the Kangbashi New Area. Intended to house a million people, it remains largely uninhabited. Intended to have 300,000 residents by 2010, government figures stated it had 28,000. In Beijing residential rent prices rose 32% between 2001 and 2003; the overall inflation rate in China was 16% over the same period. To avoid sinking into the economic downturn, in 2008, the Chinese government immediately altered China's monetary policy from a conservative stance to a progressive attitude by means of suddenly increasing the money supply and largely relaxing credit conditions. Under such circumstances, the main concern is whether this expansionary monetary policy has acted to simulate the property bubble.
In 2011, China's central government encouraged local governments to limit the purchases of new apartments.$^{:108}$

### International investment

Chinese consumers have become one of the biggest groups of investors in cross-border property. In the US, Chinese buyers invested $28.6 billion into the residential real estate in 2015, more than any other country. In Australia, Chinese buyers were approved for AU$32 billion of commercial and residential real estate investment in 2015–16, the most of any country. Sue Jong, Chief Operating Officer of Juwai.com, a subsidiary of Juwai IQI said most Chinese buyers are "the average Chinese mom and pop looking to invest overseas. The large portion is the middle to upper middle class, that's interested in a good stable investment and may be thinking about emigrating or sending their kids to school there."

### Welfare housing system, parallel dynamics, and allegations of corruption

As of 2010, China has officially ordered an end to its welfare housing system; however, according to China Youth Daily, a parallel housing market continues to exist. Government agencies continue to pay less than 20% of market value for real estate, and many officials purportedly misappropriate renovation and housing reform funds for personal gain.

### Crisis after 2020

In an effort to curb the highly leveraged real estate sector and reduce housing prices for citizens, the Chinese government adopted a Three red lines rule in 2020 to regulate the debt taken on by developers and limit their borrowing based on the following ratios: debt to cash, debt to equity, and debt to total assets. The adoption of stricter regulations triggered turmoil in the Chinese real estate market and led to bond defaults by developers and in some cases bankruptcy filings. Troubled developers include Evergrande, Shimao Group, Country Garden and others. As of Sep. 2023 34 of the top 50 developers have defaulted on their debt. Although the impact to the overall economy has been claimed to be limited, shareholders of the affected property companies have been wiped out, bondholders have been nearly wiped out, loans to these companies through wealth management products are similarly in trouble, many vendors, subcontractors and workers have not been paid for their services, while many Chinese who have purchased properties from these companies are increasingly at risk of not receiving anything. With up to 70% of Chinese wealth invested into real estate, a drop in real estate prices will make Chinese poorer and the resulting negative wealth effect will cause a contraction in consumption. In addition land sales to developers had accounted for about 40% of income for Chinese local governments but reduced building activity by developers has caused a drop in that income. While official numbers show a small decline in that revenue the size of the drop is contested due to local governments propping up the numbers by buying up their own land, and much evident severe funding issues at many of the local governments.