China's Real Estate

China cost of 100sqm house over average annual household income has been hovering around 9-11x for the past 10 years.

Beijing is 16x, in most cities, more than 8x

However Chinese citizens have government subsidies or parents to help them coup with such high prices. Mostly people afford their 1st private home from their sale of public housing, which is usually their first home
Or enjoy parent support when buying their 1st private home

Housing composition
35% public housing
13% rented public house
9% economic houses
23% commercial houses
5% rented commercial houses
11% self constructed
4% others

Downpayment of homes usually 3x annual income
mortage servicing cost is 50% of disposable income

High price to income ratio in China supported by 50m upper income households, which is 8x annual household supply of 6mn units

Home buyers have very little leverage, consumer debt only 16% of GDP
US consumer never hit below 20% of GDP by contrast

There is a risk of more than the usual in 6mn units of supply bcos municipal govt gets 30-50% of revenue from land sales and are unlikely to stop selling land

But 1% increase in urbanization rate means 4-5m new urban households every year - hence the supply glut would be covered in time

There are talks of introducing a 1.5% property tax based on 70% of buying price