You don't know what the Chinese (stock)market will do, owning Chinese stock does not mean you own a part of the company, please be aware of that. BYD is making mini cars, hybrids and ice cars, not so much BEVs. Numbers are not looking that great too. Their batteries are great tho and will be used by Tesla as well.

Unfinished buildings exposed to the weather for extended periods of time tend to deteriorate in unexpected places and ways. How many of these structures will need some "remodeling" before they can be finished if they ever are? Really sad for the buyers.

Gov’t allowed pre-sale because Chinese land are all owned by the gov’t. Developers pay for decades of rent in advance. So the faster developers expand, the more proceeds gov’t receives, the more money goes into corrupt officials/businessmen pockets.

this is why they are "laying flat". What's the point of anything anymore?

I think housing developers are the greediest and sometimes the most unethical among all types of businesses.

Having had bad experiences with contractors, I can't imagine paying for a home that hasn't been built yet.

Thank god my parents in law just told me to live with them, because they knew that if i and my wife spend our income on housing, there would be very little left to raise our daughter

This is just the tip of the iceberg. If the economy dips further, and disposable income plummets then there will be even more chaos. Problem is I don’t think it’s a ‘if’ but a ‘when’.

Sooo tragic for Mr. Li Cancelled wedding and abortion for baby because of apartment not completed. Definitely the vow 'for richer and poorer ' is not in the card. If I'm the parent in law I'll hasten wedding and offer couple to move in with us They're giving me the most precious gift ever -a grandchild. Wish Mr Li all the best.

Ohhh...so THAT'S what's going on. So glad this story has been told. Great reporting...

Florida has lots of pre- construction condos. 10% cash due at signing and held in escrow, 10% due when construction starts, 10% due when the structure is above ground, 10% due when the top floor is reached, and 60% due when certificate of occupancy issued. The developer has 2 years to complete the building once construction starts, or the buyers can demand their escrow back, and the lawsuits proceed. Delays and lawsuits will be in the newspapers.

I wish Li the best. While he has accepted his reality with grace, I hope he will see the light at the end of the tunnel for him.

It's crazy how they had to start paying mortgage even before a single brick was laid. That's a system that's just too easy to exploit and gives all the advantages to the developers with no safeguards for the purchasers. The usual norm would be to pay a deposit to secure your place and the remainder of the balance is only required upon completion and delivery, with a sunset clause that releases the purchaser of any liabilities should the project not be delivered on time and the deposit refunded (assuming the developer hadn't gone broke). It's devastating enough losing your deposit to a failed developer but nothing compared to being saddled with the full debt for a property that was never delivered. The CCP should worry about its internal finances instead of trying to build the largest navy in the world or wasting trillions in bad loans to 3rd world countries to make them debt slaves to do China's bidding. It's a shame that autocrats will always have delusions of grandeur while their citizens suffer.

The same phenomenon happens in the US as well, but the developer bears the cost of construction. Letting the developer receive consumer funds before the product is finished, is asking for disaster.

This is the practice in Taiwan too. People take out mortgages based on a model of the proposed building. It's so stupid.

Mortgage payments on unfinished property is a red flag in itself.

I find it quite amazing that CNA crew were allowed to film all these inside China.

44:00 the reason why the central government is not intervening more is quite simple. They would rather deflect the blame for an ever growing crisis than absorb responsibility themselves. Much better for them if the public thinks it is the fault of corrupt local officials.

Wonder if some have committed suicide due to debt they cannot withstand. China would naturally under-report it, if at all. Sounds like a PONZE scheme in which they bought too much additional land, instead of completing the projects for waiting customers.

It’s called a Ponzi scheme.

It’s scary how much debt a person is willing to take on just because they think the market is doing well.. financial education is so important

Another insightful report. Kudos to writer / narrator, Wei Du. I used to struggle to follow her financial reporting during her time in SG. But she’s written/produced a few pretty good documentary reports since. Thank you!

Similarly in Malaysia some projects went bust and abandoned. But the purchasers still need to pay monthly interest rates to the banks. Problem over here is purchasers need to obtain loan for houses that are in preliminary phases of construction. The purchasers only get to view a completed house through brochures and display house in developer’s sales gallery. You pick, book and obtain a mortgage then the rest is at the mercy of developers. Same sobbing story here if projects didn’t turn out.

Buyer pays 40% down payment, bank pays 60%. No wonder developers run away with the $. A recipe for collapse. 😅

The problem is lack of governance. How would you allow funds to leave a project and expand to other project like buying more lands. So in the end there is no money left for the project when initially it had got all the funds.

As a Chinese American, I bought my first property at the age of 30. Real estate was always thought of as a good investment and something that you can proudly call your own and something you can leave for your kids. I don't fault all those people for wanting to buy a home and jumping into a market that they felt was sound. I would've probably been one of those unfortunate people also.

With more agricultural lands converted to housing projects, commercial lots and industrial plants, next problem will be the food supply for the large population.

Good job on getting Micheal Pettis to comment on this issue!

My advice to clients is buy after the property is built. While you may get a cheaper unit direct from developers, the interests will cost you. Then there's the risks of location, the final product outcome not to mention the risks of non completion. In China being first time buyers, many are not aware of the pitfalls.

Many Americans did the live in your business offices during the 2008 crash. Without employees they had space and set up a front office and lived in the back office. They had lost their homes too the mortgage crisis. They showered at the gym, set up a small appliance kitchen and used the office bathroom. When times got better they moved to a home.

Very well-done reporting and insight into the current plight of China's real estate problems

The way they need to protect their sources...it astounds me how their government is more concerned with saving face than addressing their suffering.

A crash had to happen sometime, especially with the demographic crisis. Even though you could see this coming with all the ghost cities preceding COVID, it still breaks my hearts for those risking the CCPs wrath by not paying or having too much saved and being forced to buy one of these properties.

Since most Chinese have their wealth in their homes the real estate crash is causing the impoverishment for many of them. I would like to see a video or report analyzing what percentage of Chinese are being impoverished and its impact on the Chinese economy.

This is a very informative documentary!!

Thank you reseaching and sharing the mortgage crisis in China. I already konw the crisis, but don't know it's expanded so widely, especially the vacancy rate is up to 12%.

a common practice in China is the developers demands construction contractors fund the construction and repay the contractors only after they ve sold the apartments still under construction and received banks release of money based on buyers collateral loans. by this practice the developers can qicken further expansion but construction quality is barely acceptable. When the cash chain breaks, contractors cannot get money and will immediately stop construction.

These things happen occasionally in a market economy. It happened in US too and is called the "Subprime crisis" but that is not the end of USA, so it will not be the end of China too. It is a periodic adjustment of supply and demand. The people affected are mainly speculators. It is a good lesson to speculators and the government should not bail them out.

Excellent explanation to know a little more about The Great Fall Of China's Housing Market, how good to be able to find a video that provides the results that is needed, I can see that you research the subject to present the essential details, that is very good , you dedicate yourself to the subject, good contribution ♥

Fascinating documentary, thank you. I was aware of much of this but to see the numbers/massive scale of the problem, and those poor people personally affected by the construction of their homes coming to a screeching halt, is really something.

Thank you for producing such a great documentary! China is living in "interesting times", and I agree that how this plays out will affect the rest of the world too.

After selling a couple homes in 2020, I'm anticipating a housing crisis in order to buy inexpensively. As a backup plan, I've been thinking about purchasing stocks. What recommendations do you have for the best time to buy? On the one hand, I keep reading and seeing trader earnings of over $500k each week. On the other side, I keep hearing that the market is out of control and experiencing a dead cat bounce. Why does this happen?

China's real estate market is like someone very bad at playing Sim City.

I see how it works in China you pay for the mortgage without even living it . That system never works in the rest of the world. If the developer would finish the house before mortgage is purchased you would never have this problem in China.

Amazing video, really it is the most relevant and valuable for me. Really, we can easily know tips about The Great Fall Of China's Housing Market. I appreciate this video.

I feel sorry for these people. This not only happen in China but also in Indonesia. In Indonesia, it worse. Often times, they applied bankruptcy and change name and sell this unfinished property to new buyers. There is nothing you can do because developer bribe the judge and prosecutor. So you will lose if you try to sue them. Other times, they will countersue you for defamation. The famous one is Meikarta.

Just a few minutes into this and my heart is breaking for him. How can corporations or governments be so greedy to steal dreams from people???? Karma will bite them.

What CNA is not telling you is that Beijng is encouraging "social housing" similar to Singapore's HDB. The capitalistic//parasitic/rent seeking housing industry is bad for the economic life of most people if it gets too big.

It happened in Singapore in the last financial crisis when the property market crashes. Since then Singapore have try to curb a potential crash again with cooling measures. It does hurt the younger generations with the chance of securing multiple properties while compared with the seniors born in the 1960s and 50s.

This is sooo sad for most chinese home buyers . Wish them all the bests !!

Here’s the problem: all businesses are corrupt. No one trusts the stock market. So, the investments are limited. But in the US, no one would ever buy an investment property if you couldn’t collect rent and pay the mortgage.

This is terrible. If someone has to borrow money for a downpayment, then the system is broken.

*Excellent and well crafted and executed Documentary from CNA Insider you guys did an amazing job*

In ancient and medieval times, China was synonymous with quality and high standards. Now anything made in China is of poor quality and to a low standard 90% of the time. And the prices aren't always that cheap, as is typically thought.

Yes this is a mess but it's being cleaned up. The govt has allowed people to stop making mortgage payments with no penalty until construction restarts. The govt has also making finaqncing to finish construction of stalled projects. This is months ago. Why is it being repeated now with nothing new?

the very issues are happening in Australia and investment in property continues to become normalised as a wealth game also. much of those investment homes stand empty and we face a rental and homelessness crisis that is growing.

Malaysia has the same system. Pay first for unfinished house.

Real estate ownership for citizens is a global problem, that if solved with stable home ownership equity and financial security for citizens could save trillions in social services programs

The blame lays on the government for NOT regulating the bousing development and put proper financial regulations in place. The problems are: lack of laws and regulations governing.property developments.

Imagine 50% of household wealth disappeared.

Excellent reporting. High quality research, storyboard, writing, editing. I’d forgotten that journalism could perform this well. Kudos. 👍🥇🇨🇦

I consider the direct cause of the problem the misuse of funds that should have been kept for each project. Exactly why this is allowed or even intentionally directed is a more complicated questions that requires more investigation.

I wonder if there is any way that the people living in the RTB for 20-25 years could get title to the building and finish it one building at a time. Maybe make a deal with the bank holding the mortgages to split profits and at least get a liability off their books? I have no idea if that would be allowed in China...probably not, but it would at least allow people to have decent homes that they are paying for already or have paid for given the length of time since work stopped.

This is a piece of excellent journalism, with real footages taken. It is one of the most detail, indepth, and objective reporting unlike a lot of others with an axe to grind. Thanks CNA for journalistic integrity and quality.

*Those unfinished left to rot buildings look really haunted and the structure may not last for a long time due to harsh weather exposure*

Well produced show. Well done.

Amazing report… Veery informative interesting and outstanding Presentation …… Thank you

The system they made was to make the developers unaccountable to anything. Contractors basically loan materials to build the building, presale buyers got mortgages to provide the cash. When things all went downhill, developers has nothing to do but skip town. 😂

A housing bubble where the cart is in front of the horse. Making payments on a pile of unfinished concrete for years. At least that old guy at the end was getting some vegetables out of the un-landscaped soil in front of the building where he bought a unit.

Why is a basic need like housing so difficult for everyone to attain, this is true just about every industrialized countries? Why isn't the governments subsidizing this and regulating this market better? It is one of the essential quality of life factor and affect other markets severely.

Twenty five percent of business bankruptcies in Australia are real estate developers. There too a lot of Chinese from mainland China got stuck in failed projects. They got lured into these investments by relatives living in Australia and by telemarketers who spoke in fluent Chinese, be it Mandarin or any of the other dialects that abound in the mainland.

Currently, the average mortgage held in Ontario (Canada) is now over $486,000 - and the 5-year fixed rate mortgage is around 5.4%. That means that the average person in Ontario is required to pay ~$3000/month. With Utilities, taxes and insurance now costing over $12,000/year, the average mortgage holder in Ontario is on the hook to pay over $48,000/year to keep the roof over their head. The average annual salary in Ontario is ~$98,000 - however, their after tax earnings are only $69,000. So, in Ontario, the average after-tax income is $69,000 and the cost of the house they live in is $48,000. The 5-year fixed rate interest rates are expected to further increase by an additional 1.5% by Q2 of 2023.

The poor young father at the beginning of the documentary 😢

在房屋完工和檢查之前不再支付抵押貸款不再豆腐結構或詐騙客戶

I think the country really rushed the urbanization so fast and no fallback.. and for what?

The way they do their mortgage business is totally oppose with the rest of the world. How could we make payments on the unfinished house while we have to rent somewhere else ? Who will pay for the extra expense ?

Actually presales scheme like this is also a common way for developers in Indonesia to finance a project alongside bank finance, even for those credible developers. Buyers even buy based on development plans on paper. But developers have to own the land first. Buyers put heavy trust on those credible developers that permits including clear land status is done. It's also common for projects to be delayed for a year or two, so investors don't fret when one do. Some even more. But by far, most of them are completed eventually, for projects under credible developers.

The boycott of mortgage repayments is not just a financial headache for the government. While the government would like pre-buyers to continue paying their mortgages in order to keep the real estate business active it is the actual lack of building activity in the first place that is the cause the boycotts. This lack of building activity means that entire supply chain of building materials is being brought to a standstill and this means unemployment on a large scale leading in turn to further mortgage defaults. The very thing that the Chinese government fears and wanted to avoid is happening regardless of what they try to do to stop it.

It appears young investors are going through the same pain as people in the US during the 2008 housing crash.

That's why you shouldn't buy housing that is not yet built. There is no guarantee they would finish it

Technically they don't own the property. They will have to return the land after 70 years - more or less.

Greed and corruption equals disaster

27:44 It is not impossible to explain, there is greater demand and less land than in the US and in comparison, Europe has a longer history of building housing stock.

My friend laugh at me when i bought old house ,his house now still not finish after 8 years and he still paying for it.

I love CNA, what America and Indian New outlets turn into whack a china articles or videos. CNA actually tell the true story.

When people in China buy land to speculate with do they pay taxes on the property`s worth? If they had to pay taxes on it(Even for undeveloped land)right away, they would not have tried to gamble/ gobble up the vacant land as fast and would build in a timely manner. Tax laws on unfinished building projects favor the developer so they won`t bother to get them finished in a timely manner.Shady developers not honoring time schedules should have been sued and tax laws and regulations should have weeded out bad operators. Government tax proceeds could have finished some projects where laws and regulations were followed.Speculators who don`t honor contracts should end up in court. People in government (officials) who didn`t make sure laws and regulations were adhered to should be sent to prison. Tax laws curb exuberance of criminal behavior.

This is insane...Wow!!!

I am another example for investing in the real estate market in China since 2000 and starting to sell properties in 2015 when policy and market have changed. I am able to retire in my 40’s. There are unfortunate cases happened but it’s still a small percentage amount compared to the huge market. Investment always takes risk and needs to do a lot homework. I feel sorry for those people who bought off-plan property. It’s cheaper but has uncertainty risk as futures trading. Recently Chinese government launched aiding project to help completing those properties. Hope those people will get what they have paid for.

Same greed in profiting from housing happening in Singapore

A major contributor to the situation is actually paying for the assett before it has been finished and to an acceptable standard for the purchaser. Debt greed and a lack of decentralization dont help either only magnifying problems.

This is so well explained and illustrated. Very fair and deeply researched.

Temasek was all glooey about china malls n offices...wonder how much they lost

My biggest question is where did the money go? Was it all wasted already?

in my country, it's far more wonderful. People pay upfront fees, sign up for a mortgage, the projects go bust, units are never handed over, but those people have to keep paying the installments or they risk their name put in the bad credit-scoring list; some buyers have even settled in full payment; then they take to the street to demand their money; yet the developer sued them, pursued legal proceedings against some of those who yell the loudest .... until the management of the developer got invited to the chamber of the House for a hearing ....... to this day, i have no idea if those buyers have got their unit .....

Now they say minus 6% for the year. BUT when they rose 150%, then that's still a HUGE win.

Chinese can't "own" housing still. They rent it for X number of years and that rental is called a "mortgage". They can sell their rental rights which are worth more if there are more years left on the contract. It is a very sad situation. Also apartments means "buying" airspace so if nothing is built you still must pay but no way to use/sell what you bought. Also there is very little quality control in construction which means many buildings rot quickly, sometimes collapse, no maintenance is done to the concrete structures, etc.

same in vietnam FLC group and Tan Hoang Minh group also busted

And these are also happening in Sihanouk Ville right now.

paying before the building is even built is just stupid. Thats a procedure that's also done in other emerging markets and I would never do it. So much things can go wrong and you are fully liable if the building never happens.

I'm heart broken for the young man whose girlfriend had an abortion. Hope he somehow recovers from the hopelessness as time goes.