Flood of empty homes exceeds needs of first-time buyers in China
Household survey finds owners are likely to face heavy losses amid increase in vulnerability from mainland slowdown
The mainland's urban home vacancy ratio rose to 22.4 per cent last year from 20.6 per cent in 2011, and the estimated 49 million empty homes are more vulnerable to a slowdown in the housing market, the China Household Finance Survey and Research Centre has found.
Its latest survey shows the number of empty homes far exceeds the centre's estimate of demand for 32.5 million homes from first-time buyers and upgraders.
"Vacant homes are more likely to cause losses and push owners into negative equity once home prices fall," said Gan Li, head of the centre, which is affiliated with the Southwestern University of Finance and Economics in Chengdu, Sichuan province.
If home prices fall 30 per cent, 11.2 per cent of the vacant homes would be a net debt for their owners, against the 3.3 per cent ratio for occupied units, the report said, adding that these unoccupied homes involve outstanding mortgage loans of 4.2 trillion yuan (HK$5.3 trillion).
Private data already points to a drop in the mainland's home prices and analysts said the extent of the housing market correction might hinge on policies to be taken in the next few months.
"The government can't afford to allow the sector to remain weak for a prolonged period given its importance to the economy," said Bei Fu, head of mainland property research at global ratings agency Standard & Poor's.
