China Has Fifty Million Empty Apartments
While economists have been focusing on signs that GDP growth in the Chinese economy is slowing, and the escalating trade war with President Trump’s America, Bloomberg has reported on another potential pitfall in the world’s second largest economy.
According to Bloomberg, China has fifty million unoccupied apartments. This represent 22 percent – more than a fifth – of the nation’s housing stock. This clearly reflects the speculative character of much of China’s housing construction, and in both raw numbers and percentage terms is the highest vacancy rate in the world.
As noted in Bloomberg, should any negative economic development precipitate a massive sell-off of these fifty million unoccupied apartments homes, the result would be a catastrophic deflationary spiral in the Chinese real estate market. As with the U.S. subprime crisis of 2007, such a scenario would have global economic consequences of the most dire character.