China is currently grappling with a crisis that has left eerie ghost towns scattered across the country, with so many empty units that the entire population of France or the UK could find a home there. This phenomenon, though strange to the rest of the world, traces its roots back to the dramatic transformation of China’s housing landscape.
Before 1990, all housing in China was provided by the government. The privatization of housing development was then allowed, leading to a rapid expansion of the property market. It became the single biggest contributor to China’s GDP, playing a vital role in the country’s economic success.
However, the boom turned into a bubble as people started viewing property not just as a place to live but as a lucrative investment. Property developers joined the speculation game, launching developments for pre-sale and using the proceeds to expand rapidly.
The turning point came when the government, led by Xie Xin Ping, decided to curb speculation. Tightened regulations limited developer financing, and the rapid expansion ground to a halt. Developers, unable to secure easy financing, struggled to complete the houses they had pre-sold.
As a result, China’s decades-long property boom collapsed. Tens of thousands who had purchased homes faced the consequences, and protests erupted. The government intervened, attempting to encourage banks to continue lending to developers to complete already-sold houses.
Fast forward to today, and China’s ghost towns stand as silent witnesses to the rise and fall of a property market built on speculation and greed. Abandoned apartment complexes, mansions, and entire towns frozen in time serve as a stark reminder that cutting corners and unchecked speculation lead to ruin.