Recently, financial blogger “Huihu” shared a tragic story about one of his former colleagues from Hubei, a man born in the 1980s, who chose to end his life due to the pressures of property and debt. This personal tragedy reflects the harsh reality of the current Chinese real estate market. When property, once seen as wealth, turns into heavy debt, numerous middle-class families like this man are being crushed.
On August 23, financial blogger “Huihu” expressed that his former colleague had committed suicide last week. The colleague, whose last name is Liu and was born in 1983, had been a sales manager for multiple national projects. Learning about his former colleague’s tragic end left him deeply shocked. He remarked, “It’s unbelievable how a lively life can just disappear like that.”
According to “Huihu”, Liu relocated from Hubei to Beijing years ago. His wife, also from Hubei, managed a large leisure club in Beijing. Their incomes in Beijing were quite substantial. By 2017-2018, Liu had planned to leave Beijing, bidding farewell to the days of struggling in the capital, and return to Wuhan for new opportunities.
“Huihu” mentioned that Liu had accumulated experience in real estate sales, property development, and operations in Beijing, so he believed he could excel in his hometown. Additionally, their daughter couldn’t continue schooling in Beijing, so they sold their Beijing property and bought two houses in Wuhan. At the same time, they opened three “I Love My Home” real estate agency stores in Wuhan’s central district.
Wuhan, as the epicenter of the COVID-19 outbreak in China, suffered severe economic impacts due to the strict lockdown measures. “Huihu” disclosed that Liu’s three real estate agency stores had to close down. Subsequently, Liu purchased a commercial property and an office building, sinking into heavy debt. Under immense economic pressures, coupled with his child’s declining academic performance, Liu tragically reached a point of no return.
Liu’s personal experience is not isolated but a stark representation of the overall collapse of the real estate market in Wuhan.
According to data from SouFun, Wuhan’s second-hand housing prices witnessed a staggering 52% decline, outpacing other provincial capitals in the country, reaching a “knee-jerk” level. Many Wuhan homeowners vented on social media, expressing how properties once valued in millions could now only fetch tens of thousands.
The trend of foreclosed properties serves as a critical indicator of the macroeconomic situation and real estate market health. Guoxinda data released a comprehensive analysis report on the national foreclosure house data from January to December 2024. The report unveiled a 51.69% year-on-year increase in the number of foreclosed houses nationwide.
In the top cities with high foreclosure rates from January to December 2024, Wuhan ranked high with 12,474 properties being foreclosed.
“Huihu” further observed that Wuhan’s foreclosed properties had surged over five times in the past three years, indicating a growing number of families forced into auctions due to their inability to repay mortgages.
He revealed a commonality among individuals dealing with properties in various cities was that those born in the 1980s who purchased multiple properties were facing debts exceeding millions. In such scenarios, where properties that were once wealth now symbolize debt, the burden has overwhelmed many in their prime years.
Apart from macroeconomic data, the real estate plight in Wuhan also stems from significant shifts in residents’ property purchase mindsets.
Blogger “Xiaoming” recently toured Wuhan’s Hanyang District and noted tall residential buildings of fifty to sixty levels lining the roadsides. However, taxi drivers pointed out that the prices of these properties had become a joke. A few years back, these properties fetched high prices, with the most expensive ones going for 24,000 RMB per square meter. Yet, now the prices had plummeted to 13,000 RMB per square meter. Initial property buyers had presumed a profitable deal, but to sell now, apart from the down payment, they had to incur additional losses in the tens of thousands.
“Xiaoming” remarked that in past years, super-tall residential buildings in Wuhan with exceptional sightlines were selling for exorbitant prices. Developments like the Midtop Village in Hanyang once sold for 28,000 RMB per square meter, while the Wanda-developed ultra-high-rise apartments in Hehan Street, reaching up to sixty stories, were once sold for 40,000 RMB per square meter. The shift in preferences towards lower-density residences where lower floor counts are favored has led to the abandonment of these once-revered super-tall residential structures.
He added that previously, the common belief was that property prices would surge in areas with new subway lines. However, in reality, after a subway line was operational, many areas experienced a decline in property prices. Examples such as Huangpi District Longcheng City in Wuhan witnessed high property values even before the subway was functional. The hype was that property prices would escalate post the subway opening, attracting investors to purchase at over 13,000 RMB per square meter. Today, with the subway running, prices have dropped to 6,000-7,000 RMB per square meter.
He lamented on how in the past, residents were conditioned to believe that securing properties in major cities, even with wealth, was a daunting task. The unattainability extended beyond property prices, including household registration. Meeting the property ownership criteria was extremely challenging, and the requirements to settle only exacerbated the issue.
Now, due to economic downturns and local government financial difficulties, major cities have relaxed property purchase restrictions, significantly lowering residency requirements. Homebuyers now have more options, and mortgage rates have hit historical lows. Yet, homeowners who had bought at premium prices are witnessing their property bubble burst, leading to a profound change.