Comparison of Real Estate Bubbles in China and Japan, and Prospects for the Chinese Economy | ニッセイ基礎研究所
- シンクタンクならニッセイ基礎研究所 >
- 経済 >
- 中国経済 >
- Comparison of Real Estate Bubbles in China and Japan, and Prospects for the Chinese Economy
Comparison of Real Estate Bubbles in China and Japan, and Prospects for the Chinese Economy
三尾 幸吉郎
このレポートの関連カテゴリ
1――China's Real Estate Market Continues to Decline
This downturn is mirrored in sales figures. Real estate sales plummeted to 1,117 square kilometers in 2023, approximately 60% of the peak seen in 2021. Historically (Chart 2), sales dipped by around 10% during the global financial crisis (2008) and the China shock (2014–15), but recovered to pre-shock levels within a few years, continuing to rise thereafter.
The real estate sector was once a key driver of the Chinese economy. Real estate growth, as measured by GDP, averaged 10.3% annually in the 1990s and 10.7% in the 2000s, with double-digit growth becoming the norm. However, real estate growth slowed to 4.7% in the 2010s, and it declined by -3.9% compared to the previous year in 2022, followed by a -1.3% decline in 2023, marking the second consecutive year of negative growth (Chart 3). Consequently, many real estate developers are facing financial instability. Despite the Chinese government's introduction of the "Article 161" measures in November 2022, aimed at providing financial assistance, the effects of these measures were temporary, and real estate-related loans remain stagnant (Chart 4).
The current real estate downturn in China bears resemblance to the real estate bubble burst that Japan experienced in the 1990s. This article compares and analyzes the real estate bubbles in Japan and China, and subsequently delves into the future of the real estate bubble in China.
1 The People's Bank of China and the China Banking and Insurance Regulatory Commission issued a notice on November 11, 2022, to fully support the stable and healthy development of the real estate market through finance. They announced 16 support measures in six areas, including stabilizing loans to real estate developers, providing special loans to ensure the reliable delivery of housing, encouraging asset management companies to support financially troubled real estate developers, and protecting the interests of mortgage users.
2――Real Estate Bubble in Japan
The real estate bubble in Japan began to take shape around 1987. According to data from "Land in Tokyo" published by the Tokyo Metropolitan Government (Chart 5), the price per 75 square meter of an apartment in the Tokyo 23wards area was 41.85 million yen (6.7 times the annual income) in 1986. However, it surged to 66.08 million yen (10.3 times the annual income) in 1987, 94.2 million yen (14.2 times the annual income) in 1988, and 107.85 million yen (15.8 times the annual income) in 1989.
This surge was fueled by the "land price myth," which asserted that land prices would always rise. Following the Plaza Accord in 1985, Japan experienced a sharp appreciation of the yen, prompting Japanese companies to enhance their ability to cope with the strong yen by expanding overseas production and cutting costs through streamlining and automation. Additionally, the Bank of Japan lowered its discount rate five times to address the economic downturn caused by the strong yen, leading to a structural shift from reliance on external demand to domestic demand. With low interest rates, Japan witnessed a speculative boom known as "Zaitech," with real estate emerging as a favored investment option.
Examining the historical trends in land prices in Japan (Chart 6), we observe that while prices experienced periodic declines, they generally continued to rise over the long term, rebounding after a few years. Moreover, the growth in land prices consistently outpaced the growth in consumer prices and wages, reinforcing the notion of the "land price myth."
Consequently, real estate developers spearheaded a surge in real estate investments, while general corporations actively acquired real estate, and ordinary individuals began investing in condominiums with borrowed funds. Financial institutions provided financial backing for these speculative activities. As a result, Japan as a whole became complacent about high prices, leading to an unprecedented rise in real estate prices.
The real estate bubble in Japan reached a turning point around 1990, with land and condominium prices peaking in 1991 before starting to decline2. Several factors contributed to this decline: (1) an increase in the official discount rate and subsequent rise in long-term interest rates since 1989 (Chart 7), (2) revisions to the tax system following the enactment of the Basic Act for Land , and (3) regulations such as "total volume control," which limited the growth rate of loans to the real estate industry (excluding loans to public housing development institutions) to prevent it from exceeding the overall rate.
As prices began to fall, real estate developers, corporations, and individuals began to withdraw from the market, akin to rats fleeing a sinking ship. By around 2000, land and condominium prices had returned to pre-bubble levels (1986), and Japan's real estate bubble had finally burst.
Subsequently, Japan embarked on a cleanup effort to address the aftermath of the real estate bubble. Financial institutions reduced lending to the real estate industry under total volume controls. Real estate developers, who had been expanding their real estate investments using loans from financial institutions, faced declining asset values due to falling real estate prices and increased costs from rising interest rates on their liabilities. To manage this, they resorted to fire sales (selling properties below cost) to repay debts and began restructuring their balance sheets. Similarly, corporations and individuals who had leveraged investments (investments using borrowed funds) also adjusted their portfolios. The forced selling of properties led to a wave of bankruptcies among real estate developers, and some corporations faced bankruptcy despite profitability in their core businesses. Many individuals also went bankrupt due to their debt obligations. Non-performing loans at financial institutions surged, leading to financial instability, prompting institutions to reluctant lending, causing a credit crunch (Chart 8).
2 The timing of the decline in land prices varied among regions. Around 1988, when land prices began to decline in Tokyo, they increased in metropolitan and regional areas such as Osaka and Nagoya. This was because funds were flowing into areas where prices were lower than in Tokyo.
このレポートの関連カテゴリ
三尾 幸吉郎
研究・専門分野
公式SNSアカウント
新着レポートを随時お届け!日々の情報収集にぜひご活用ください。
新着記事
-
2024年05月09日
2024年4月、グローバル株式市場は反落 -
2024年05月09日
曲線にはどんな種類があって、どう社会に役立っているのか(その5)-サイクロイド(その性質等)- -
2024年05月09日
「新築マンション価格指数」でみる東京23区のマンション市場動向【2023年】(2)~コロナ禍以降、「駅近」志向が高まる一方、「住居の広さ」と「中心部までのアクセス」への評価は揺り戻しの動きも -
2024年05月09日
基礎研REPORT(冊子版)5月号[vol.326] -
2024年05月09日
そもそも何が「保険業」?-保険業該当性に関するQ&A
レポート紹介
-
研究領域
-
経済
-
金融・為替
-
資産運用・資産形成
-
年金
-
社会保障制度
-
保険
-
不動産
-
経営・ビジネス
-
暮らし
-
ジェロントロジー(高齢社会総合研究)
-
医療・介護・健康・ヘルスケア
-
政策提言
-
-
注目テーマ・キーワード
-
統計・指標・重要イベント
-
媒体
- アクセスランキング
お知らせ
-
2024年04月02日
News Release
-
2024年02月19日
News Release
-
2023年07月03日
News Release
【Comparison of Real Estate Bubbles in China and Japan, and Prospects for the Chinese Economy】【シンクタンク】ニッセイ基礎研究所は、保険・年金・社会保障、経済・金融・不動産、暮らし・高齢社会、経営・ビジネスなどの各専門領域の研究員を抱え、様々な情報提供を行っています。
Comparison of Real Estate Bubbles in China and Japan, and Prospects for the Chinese Economyのレポート Topへ