The China debt crisis led by the real estate bubble burst will be unprecedented. Even a single major developer could have a trillion Yuan (US$145 billion) debt; the overall total will be a mystery. Yet, we can still have a very vague idea about how significant the debt is by doing some basic arithmetic. Life will be much simpler if we assume all problems originate from excess properties. Based on a 2018 report from the Survey and Research Center for China Household Finance of Southwestern University of Finance and Economics, there were 130 million vacant flats.
From real estate agent’s figures, the median housing price across cities is likely 20 to 30 thousand Yuan per square metre. Let’s take the lower end. Further, assuming a flat size of 50 square metres (or 545 square feet), each flat should be worth 1 million Yuan (US$145,000). A total of 130 million excessive apartments should be worth 130 trillion Yuan (US$18.85 trillion). The above flat vacancy was estimated based on a vacancy rate of 21.4 percent, where 5-10 percent is internationally regarded as usual, and 10 percent plus is regarded as dangerous. This means at least 11.4 percent of the above vacancy rate is dangerous….