China Faces a Surplus Houses, Global Concerns Over Flood of Cheap Building Materials

China is grappling with a housing surplus sufficient for 150 million people, raising global concerns over a potential flood of cheap building materials.

China Faces a Surplus Houses, Global Concerns Over Flood of Cheap Building Materials
Photo by Mufid Majnun / Unsplash

China, the world's second-largest economy, is currently facing the repercussions of a burst real estate bubble, with a housing surplus that could accommodate approximately 150 million people, or about 50 million homes.

This surplus has led to a drastic reduction in property prices, with some apartments now being sold at a 22% discount. Country Garden Holdings, a leading real estate company in China, is among those slashing prices to alleviate financial strains. The situation has resulted in a glut of unsold properties, with experts predicting it may take over five years for China to absorb the excess housing.

The downturn in China's real estate market has not only affected domestic economic dynamics but is also posing a global challenge. The excess supply, coupled with diminishing demand due to a shrinking population, is expected to lead to a surge in exports of cheap building materials from China. Since the spring of 2022, when investment in China's real estate sector sharply declined, prices for key construction materials like rebar steel and copper have fallen. Although copper demand is rising due to its use in electric vehicles and other eco-friendly products, weak housing demand in China has prevented significant price increases.

Experts are concerned that the export of cheap building materials from China could suddenly spike, affecting global markets. In 2023, China's steel product exports reached 90 million tons, an increase of over 20 million tons from the previous year. Countries like Mexico have already raised import tariffs on steel and related products to protect their domestic industries from competition with cheap imports from China. This real estate crisis in China is now evolving into a global issue, with significant implications for the worldwide construction materials market.

24H Money