Chart of the Day: China’s Growing Mortgage Debt Drags on the Economy

Outstanding personal home mortgages in China have expanded sevenfold from 3 trillion yuan ($430 billion) in 2008 to 21.9 trillion yuan in 2017, according to data from the People’s Bank of China (PBOC), the central bank.

Graphic: Gao Baiyu/Caixin

By the end of September, the value of outstanding home mortgages had further surged to 24.9 trillion yuan, up 18% year-on-year, according to the PBOC. Rising real estate prices, property speculation and the value that Chinese people traditionally place on home ownership have helped drive a trend that has turned many people into what are called “mortgage slaves.”

Home mortgage debt makes up a significant portion of total household debt in China. As of the third quarter, it accounted for 53% of the 46.2 trillion yuan in outstanding household debt, according to the central bank.

The rising cost of housing has been a drag on consumer spending, leading many Chinese to turn to short-term consumer loans, the central bank said in its 2018 financial stability report, which was published last week. In 2017, outstanding short-term consumer credit surged 37.9% to 6.8 trillion yuan.

Many middle-class residents, especially in Beijing and Shanghai, have also mentioned on social media that the cost of housing has caused them to change their spending habits, a phenomenon known as a “consumption downgrade.”

Contact reporter Charlotte Yang (yutingyang@caixin.com)