Residential real estate in China: the delicate balance of supply and demand
Cecchetti & Schoenholtz via moneyandbanking.com:
The urban population share in the United States, which represents the median for the Group of Seven advanced countries, was 81% in 2013, or 28 percentage points above China’s...
If the rapid urbanization since 1990 continues apace, it would take until 2028 for China to surpass the 2013 U.S. urban population ratio. If the Chinese population largely steadies over this period – as seems likely – its urban population would still rise by something on the order of 400 million people! This seems likely to support prices and rents.
Prospects for university graduates: questionable
But the realities of the market quickly set in. At nearly seven million a year, China today produces twice as many university graduates as it did 10 years ago. The supply appears to be outpacing the demand from prospective employers. According to official data, about 88 jobs requiring graduate-level education are available for every 100 such job seekers. For those with only vocational high school qualifications, the ratio climbs to 104 jobs for every 100 candidates.
“The reality is that a taxi driver in Beijing, unskilled, can make more money than a new university graduate,” at least initially, said Mr. Conrad of the Asian Development Bank. “This is of course shocking for these young people.”
Reported by the NYT on April 21st.