China’s Rental Market Flooded with Listings as Rents Continue to Slide - The reality of more listings and lower rents is here to stay, says CRIC report
I mean, I don’t think it’s a contradictory standard than Western governments, as I don’t know if @xiaohongshu@hexbear.net has expressed some other standard for Western governments, and what I’ve seen is usually critical of them as well. The idea from the comment they posted on hexbear appears to be that the local governments were investing in this non-real growth sector to the point with the decreases in rent, they don’t have the funding for other infrastructure growth and are having to increasingly leverage debt to get things done since they can’t extra themselves from the issue.
The crux, from my understanding, wasn’t that rent going down is bad, but that it’s going down due to massive capacity that is heavily invested in by the local government, and such investment was done under the assumption of increasing prices, and with decreasing costs, they lack funding for some of the other projects and with the central government trying to reduce this behavior, are having to rely on other means of acquiring debt.
Rent going down is simply the function of the real estate value going down. In other words, a symptom of a much deeper problem.
The local government income source is tied to land premium (on average across China, 30% of local government revenue comes from leasing and selling land, and this figure has already dropped from a higher proportion after the implosion of the property market sector in the last couple years), and the fall in revenue makes it much more difficult for the local governments to repay their overhanging debt, and have to cut expenses for the city as they have to spend more of their dwindling pool of income on debt servicing.
You can read the report on China’s land financing 2024 and note that the data was compiled from a year prior. It has gotten worse since then, and I’m still waiting for the publication of their 2025 report (the data already exist, the compilation simply makes it nicer and easier to grasp everything in one go).
The person you’re responding to doesn’t know what they’re talking about, as is typical with many Westerners. Don’t get too hang up on that.
investment was done under the assumption of increasing prices
Okay. This is just a bad way of percieving a real-estate market because property can be rented or sold off. The price of rent matches the service of the debts plus any depreciation. If it’s not going to break even or profit in the long term then it would be SOLD as soon as possible.
If it’s being rented for a low price, the debt is NOT through the roof. I am skeptical that debt is a problem.
This is the opposite of the problem everywhere else where asset prices and debts are all going up and up.
This doesn’t mean an asset is worth more. It means the currency is depreciating in value.
And it means inequality is rising. (The higher price relative to incomes is an indication that the asset is out of reach for more people)
Okay. This is just a bad way of percieving a real-estate market because property can be rented or sold off. The price of rent matches the service of the debts plus any depreciation. If it’s not going to break even or profit in the long term then it would be SOLD as soon as possible.
If it’s being rented for a low price, the debt is NOT through the roof. I am skeptical that debt is a problem.
Won’t get disagreement from me here, I presumed costs would be cut to minimize losses as well. Makes sense to me just seemed like a different type of potential issue than how the short comment above may have some assume (and would lead to different criticisms) so wanted to clarify.
You provided the hexbear link and I read it. Frankly there is a tonne of doomer “but at what cost” bullshit.
The metric is simple. Why second guess it? Rents down = good for renters. If you want them up, you’re a fucking landlord.
You want rent to fund the next project? Then you’re an austerity nut.
There’s a recent video by Garry’s Economics where he says everyone has gotten too obsessed with monetary policy and not focused on fundamental principles like resources. The last 20 years have shown it is not the cure all for economic issues. Putting more money into the system or taking it away will change prices but there’s no correlation with economic success.
If housing is being rented then those resources are being used in the economy. Price discovery has set the money value. Putting housing where people will live is the true sign that government has invested well.
The metric is simple. Why second-guess it? Rents down = good for renters. If you want them up, you’re a fucking landlord.
You want rent to fund the next project? Then you’re an austerity nut.
For context, that user generally wants China’s government to recentralize to a degree and think these things are an “issue” insofar as the local governments are essentially filled with Western neoliberal brain worms and need stricter oversight and centralization to prevent dumb neoliberalism. I don’t think they want higher rent, but believe that local governments do due to landlordism brain worms.
I think (again, this is how I read the comment) the core of the frustration is they feel like the financial sector is making bank off this, and because it was done relatively recklessly, some of the massive amounts of resources being used to manage the falling prices aren’t being used in other sectors, which is contributing to stagnant wages, an absurd young unemployment and a continuous deflationary spiral that aggrevates the other two. (I’m realizing I’ve read far too many of their comments lol)
I will let you know many refer to xiaohongshu as Hexbear’s resident doomer, so you aren’t the first to feel that way lol. Some of their comments I’ve gathered also work within a neoliberal framework as the user fully believes much of China’s economic policy is working within it and are meant to highlight the impossibility of solving those issues within its framing as a rhetorical tool for a break from western neo-economic policy.
Frankly, I don’t spend nearly enough time on economic studies and theory to dismiss it myself, and most the time I’ve seen people argue against their ideas on our side they just resort to calling the user names so was also curious how grad would interpret things.
they feel like the financial sector is making bank off this, and because it was done relatively recklessly, some of the massive amounts of resources being used to manage the falling prices aren’t being used in other sectors, which is contributing to stagnant wages, an absurd young unemployment and a continuous deflationary spiral that aggrevates the other two. (I’m realizing I’ve read far too many of their comments lol
Stagnant wages, deflationary spiral, etc are all price and money related. This was the point Gary’s Economics was getting at.
Building more resources that are available to more people is GOOD. Asset prices going up is actually a sign the monetary policy has been overused. Property and stock prices can go up if you inject credit into the economy. That does NOT necessarily make the economy more productive.
xiaohongshu has a hate boner for local or some other issues and then is taking a stat like rent prices falling and turning it around to say it’s bad. Or that local governments are going to make a bad move any minute now.
Basically saying “Even though rent prices coming down is GOOD, they built housing for the wrong reasons, so they are going to use austerity next and the sky will fall”
This is my general stance as well, but I didn’t want to get too involved in a discussion I don’t feel qualified for, so I kept my initial question brief.
I mean, I don’t think it’s a contradictory standard than Western governments, as I don’t know if @xiaohongshu@hexbear.net has expressed some other standard for Western governments, and what I’ve seen is usually critical of them as well. The idea from the comment they posted on hexbear appears to be that the local governments were investing in this non-real growth sector to the point with the decreases in rent, they don’t have the funding for other infrastructure growth and are having to increasingly leverage debt to get things done since they can’t extra themselves from the issue.
The crux, from my understanding, wasn’t that rent going down is bad, but that it’s going down due to massive capacity that is heavily invested in by the local government, and such investment was done under the assumption of increasing prices, and with decreasing costs, they lack funding for some of the other projects and with the central government trying to reduce this behavior, are having to rely on other means of acquiring debt.
Rent going down is simply the function of the real estate value going down. In other words, a symptom of a much deeper problem.
The local government income source is tied to land premium (on average across China, 30% of local government revenue comes from leasing and selling land, and this figure has already dropped from a higher proportion after the implosion of the property market sector in the last couple years), and the fall in revenue makes it much more difficult for the local governments to repay their overhanging debt, and have to cut expenses for the city as they have to spend more of their dwindling pool of income on debt servicing.
You can read the report on China’s land financing 2024 and note that the data was compiled from a year prior. It has gotten worse since then, and I’m still waiting for the publication of their 2025 report (the data already exist, the compilation simply makes it nicer and easier to grasp everything in one go).
The person you’re responding to doesn’t know what they’re talking about, as is typical with many Westerners. Don’t get too hang up on that.
Okay. This is just a bad way of percieving a real-estate market because property can be rented or sold off. The price of rent matches the service of the debts plus any depreciation. If it’s not going to break even or profit in the long term then it would be SOLD as soon as possible.
If it’s being rented for a low price, the debt is NOT through the roof. I am skeptical that debt is a problem.
This is the opposite of the problem everywhere else where asset prices and debts are all going up and up.
This doesn’t mean an asset is worth more. It means the currency is depreciating in value.
And it means inequality is rising. (The higher price relative to incomes is an indication that the asset is out of reach for more people)
Won’t get disagreement from me here, I presumed costs would be cut to minimize losses as well. Makes sense to me just seemed like a different type of potential issue than how the short comment above may have some assume (and would lead to different criticisms) so wanted to clarify.
You provided the hexbear link and I read it. Frankly there is a tonne of doomer “but at what cost” bullshit.
The metric is simple. Why second guess it? Rents down = good for renters. If you want them up, you’re a fucking landlord.
You want rent to fund the next project? Then you’re an austerity nut.
There’s a recent video by Garry’s Economics where he says everyone has gotten too obsessed with monetary policy and not focused on fundamental principles like resources. The last 20 years have shown it is not the cure all for economic issues. Putting more money into the system or taking it away will change prices but there’s no correlation with economic success.
If housing is being rented then those resources are being used in the economy. Price discovery has set the money value. Putting housing where people will live is the true sign that government has invested well.
For context, that user generally wants China’s government to recentralize to a degree and think these things are an “issue” insofar as the local governments are essentially filled with Western neoliberal brain worms and need stricter oversight and centralization to prevent dumb neoliberalism. I don’t think they want higher rent, but believe that local governments do due to landlordism brain worms.
I think (again, this is how I read the comment) the core of the frustration is they feel like the financial sector is making bank off this, and because it was done relatively recklessly, some of the massive amounts of resources being used to manage the falling prices aren’t being used in other sectors, which is contributing to stagnant wages, an absurd young unemployment and a continuous deflationary spiral that aggrevates the other two. (I’m realizing I’ve read far too many of their comments lol)
I will let you know many refer to xiaohongshu as Hexbear’s resident doomer, so you aren’t the first to feel that way lol. Some of their comments I’ve gathered also work within a neoliberal framework as the user fully believes much of China’s economic policy is working within it and are meant to highlight the impossibility of solving those issues within its framing as a rhetorical tool for a break from western neo-economic policy.
Frankly, I don’t spend nearly enough time on economic studies and theory to dismiss it myself, and most the time I’ve seen people argue against their ideas on our side they just resort to calling the user names so was also curious how grad would interpret things.
Stagnant wages, deflationary spiral, etc are all price and money related. This was the point Gary’s Economics was getting at.
Building more resources that are available to more people is GOOD. Asset prices going up is actually a sign the monetary policy has been overused. Property and stock prices can go up if you inject credit into the economy. That does NOT necessarily make the economy more productive.
xiaohongshu has a hate boner for local or some other issues and then is taking a stat like rent prices falling and turning it around to say it’s bad. Or that local governments are going to make a bad move any minute now.
Basically saying “Even though rent prices coming down is GOOD, they built housing for the wrong reasons, so they are going to use austerity next and the sky will fall”
That is classic doomer cope.
This is my general stance as well, but I didn’t want to get too involved in a discussion I don’t feel qualified for, so I kept my initial question brief.