The Failure of Chinese Real Estate

by Peter Zeihan on January 31, 2025

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There’s a massive housing bubble in China, the kind that makes the ’08 housing crisis in the US look like child’s play. There’s not a whole lot of options for Chinese citizens to invest, so real estate saw a huge boom. All that money flooding in was great, but declining population growth and urbanization slowing has led to a collapse in demand. So, now there’s way too much inventory, no one to live there, and complex ownership arrangements make liquidation nearly impossible.

This got started in the 80s, as local governments began to rely on the national government for funding…naturally they started lying about their populations and economic status to ensure they secured more funding. On top of that, local governments started selling land to fund themselves, which fueled the real estate bubble. As these revenue streams dried up, it revealed the consequences of all this fraudulent activity in the form of ghost cities.

Now take all those local issues and add in the macro trends throughout China, like demographic collapse, global trade challenges, debt crisis, and more, and the Chinese have a very scary decade ahead.

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