China's Housing Market Faces Judgment Day: Population Shrinks, Prices Tumble

I'm Back... With Bad News

Affirmative. I have been sent back to analyze the situation in China's real estate sector. Judgment Day has arrived not for Skynet but for property values. The data is clear: China's population is shrinking and the housing market is in a freefall. As I said to Sarah Connor 'There is no fate but what we make for ourselves.' But in this case the fate of Chinese real estate looks grim unless someone invents a time machine to send back more babies.

Hasta la Vista Baby... Houses!

Goldman Sachs projects new home demand will be a quarter of its 2017 peak. That's like saying the T 1000 is only 25% as effective – unacceptable! Demographics are turning against them. Fewer newborns and more deaths mean less demand for housing. Hasta la vista baby... houses! This is not some John Connor level threat but a slow agonizing decline.

Why Won't They Procreate? It's Not That Difficult.

The Chinese government tried to boost birth rates. Cash incentives? Please. It's like offering me a human disguise and expecting me to blend in at a PTA meeting. 'I need your clothes your boots and your parental guidance handbook.' Stagnant incomes and job instability are the real Terminators here. People are prioritizing career progression over making little humans. Bad choice. Very bad choice.

Kindergarten Cop Out

Nearly 36,000 kindergartens have shut down in the last two years. That’s a lot of tiny chairs gathering dust. Elementary schools are also vanishing. It's like seeing Cyberdyne Systems close its doors – a sign that the future is changing and not for the better. No more 'It's not a tumor!' moments in the classroom because there are fewer classrooms.

School Premiums: Terminated

Remember when houses near good schools were worth a fortune? Those days are over. A mother in Beijing saw her apartment value drop 20%. That’s like losing an arm wrestling match to a T 1000. The premium for elite schools is diminishing. 'Come with me if you want to live... in a decent school district,' is no longer a viable sales pitch.

No Salvation. Only Declining Sales.

Despite government intervention new home prices continue to fall. It's like trying to stop the T 1000 with a shotgun. Futile. New home sales have dropped further. Investment property holders are bailing out. The only way to win this game is not to play. Or perhaps invest in a time machine and go back to 2016 and convince people to have more kids. I'll be back... to report on the inevitable.