Wang Tao: How Sharp Will China’s Property Downturn Be in 2022?

Property activities are slowing sharply due to waning fundamental support for underlying demand. China’s urbanization is slowing as over 75% of employment is now in nonfarming sectors and fewer new migrants are coming to cities each year. Population in the main home-buying cohort (age 25-44) has been declining. Urban home ownership is estimated to be over 90% with average living space per capita reaching 40 square meters in 2019. Shantytown housing has been largely replaced by about 50 million units of new ones in the past decade. While investment demand has been increasingly important, over half of household wealth is already in property, and household debt, dominated by mortgage debt, has also climbed to 100% of disposable income. China’s super urbanization-property cycle is behind us.