Floor space construction started in China 1998-2023

In 2023, the expanse of newly started real estate construction in China amounted to less than 954 million square meters. This was again a significant decline of more than 20 percent from the previous year, despite the initial expectation of recovery after the end of COVID-19 control measures.

The construction boom

The housing market reforms initiated in 1998 unleashed a two-decade-long golden era for China's real estate and construction sectors. With the dramatic rise in home prices and nationwide urban renewal projects, a significant number of residential properties, mainly consisting of high-rise complexes, were erected across China for sale to its growing middle-class population. By 2013, the annual expanse of newly started construction projects exceeded 2,000 million square meters. Despite a decline in the years that followed, with the government's stimulus policies, constructions reached an all-time high of 2,217.54 million square meters by 2019, before the start of the COVID-19 pandemic.

Increased risks in the real estate sector

The continuous expansion of the real estate industry has resulted in a substantial oversupply in the market. This is particularly noticeable in smaller cities and towns in the provinces. Many property developers, including giants such as Evergrande and Country Garden, found themselves in financial hardship owing to the large number of unsaleable or vacant homes they had built. This has resulted in more than one million unfinished homes across China, exposing homebuyers and their banks to significant financial risks. Moreover, due to the slowdown of China's economy, the outstanding mortgages accumulated over the last two decades will also become a long-term concern for the country's financial institutions and industries.