As a lay person, it has been extremely difficult to figure out what is going on. I have a weak grasp on four points(with low confidence on any of them being completely accurate):
1. There is an excess supply of apartments including the ones that have already been sold. The demand side is mostly people buying second and third units as investments.
2. China is going through a weird demographic situation. The younger generations are significantly fewer in number, they will need fewer apartments to live in.
3. Chinese provincial governments raise money by developing land and continue to be incentivized to build/approve/encourage a lot of apartment units.
4. All of this is funded with mortgages.
Thing is, all four of these can not possibly be right. It’s a little too insane. Whoever is on the other side of all those mortgages should have abandoned ship a long time ago otherwise.
What am I missing?
Who is holding all that mortgage debt? Who is continuing to issue more of that debt? When do the number of people selling their investment properties exceed the number of younger generations looking to buy their first primary residence?
1. There is an excess supply of apartments including the ones that have already been sold. The demand side is mostly people buying second and third units as investments.
2. China is going through a weird demographic situation. The younger generations are significantly fewer in number, they will need fewer apartments to live in.
3. Chinese provincial governments raise money by developing land and continue to be incentivized to build/approve/encourage a lot of apartment units.
4. All of this is funded with mortgages.
Thing is, all four of these can not possibly be right. It’s a little too insane. Whoever is on the other side of all those mortgages should have abandoned ship a long time ago otherwise.
What am I missing?
Who is holding all that mortgage debt? Who is continuing to issue more of that debt? When do the number of people selling their investment properties exceed the number of younger generations looking to buy their first primary residence?