Chinese villagers jumped at the deal of a lifetime—then it turned sour

A residential buildings project in Yangzhou. PHOTO: BLOOMBERG NEWS
A residential buildings project in Yangzhou. PHOTO: BLOOMBERG NEWS


The country’s real estate crisis has dealt a particularly harsh blow to homeowners in poorer regions, some of whom traded family homes for planned apartments that never materialized.

It seemed to be a great deal at the time: Swap an aging townhouse and a small piece of farmland for five apartments and two stores.

Bella Zhao’s family grabbed that offer in 2009, when property developers led by Wanda Group moved into their sparse, snow-capped village in China’s northeastern Jilin province. Wanda planned to spend $2.8 billion to turn the area into a high-end resort replete with ski slopes, golf courses, hunting spots and five-star hotels. The developer offered locals a large number of new apartments in town in exchange for their old homes, creating a village of property tycoons almost overnight.

“I was so happy then," said Zhao, who was a teenager at the time and later inherited the properties.

Now, all five of her apartments sit empty. Only one of the stores has a tenant. The ambitious development project stalled years ago; the promised tourism boom never happened. Zhao has become so desperate that she has offered to lease the apartments rent-free so long as the tenants agree to pay the bills and management fees.

“But no one wants to live there, even for free," she said. “Everyone who still lives in the town has their own properties."

Graphic: WSJ
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Graphic: WSJ

While much attention has focused on Chinese property developers in the wake of the country’s real estate crash, homeowners, too, are stuck. Many are desperate to sell with no buyers in sight. Others, like Zhao, thought they had a winning lottery ticket, only to find it is now impossible to cash it in.

Their plight feeds into the uncertainty weighing on China’s economy. It holds back attempts to get consumers to spend more, which would lead to higher demand, leaving the government to once again focus on industrial policy and increased supply.

China’s real-estate market has been in a downturn for three years after Beijing’s attempts to burst a debt bubble in the sector fueled a panic. At first, home prices remained resilient even as sales declined. But in 2022, home prices began a decline that has erased a fifth of their value in some of China’s most developed cities, according to data from property agency Centaline.

“When property prices started to fall, I felt upset," said Zhao, 26. “It felt like my life plans were thrown into disarray."

There has been little respite since. New home sales from China’s largest 100 developers dropped by 47.5% in the first quarter compared with the same period last year, and are now around their lowest levels on record. The price of existing homes in China’s most developed cities fell 7.3% year-over-year in March, the worst decline since the government started releasing data in 2011.

The market is facing a simple economic problem: too many sellers, and too few buyers. Making matters worse, villagers who traded their homes with developers, often for several new apartments, are adding to the wall of potential supply, said Liu Yuan, head of property research at Centaline.

“It is impossible to sell at a decent price," said a homeowner in Nanjing, who owns eight properties with her husband and parents, five of which were compensation for relocating.

Data on the ownership of properties by those who traded their houses for new apartments is rarely updated. But according to a report published by Nie Riming and Guo Xiaojing from the Shanghai Institute of Finance and Law, a think tank, around 6.8% of existing homes in 2017 were properties that people received after trading in aging homes.

Graphic: WSJ
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Graphic: WSJ

A man in China’s Henan province said he is still waiting for the six apartments he was promised in 2018 in exchange for his townhouse and piece of farmland when a developer moved into his town. The apartments were to be delivered in 2021, but the development has stalled.

He said he is optimistic that the apartments will eventually be finished, but he isn’t optimistic about much else. Perhaps two of the apartments will be occupied by his relatives, he said. The rest will sit empty.

“It’s not possible to sell or rent out. It’s not worth decorating," he said.

The real-estate downturn has had an acute effect on China’s smaller towns and villages. Real estate and related sectors accounted for around a quarter of China’s economic output before the crisis, according to widely cited estimates, but the sector had an even greater importance for some poorer areas, which didn’t have much to offer besides their land.

“The economy and job opportunities in these cities haven’t been able to sustain the scale of the housing supply and prices," said Tao Ran, a professor at the Chinese University of Hong Kong, Shenzhen.

Local governments have been stepping up efforts to encourage home purchases. Earlier this month, officials in Zhengzhou, in China’s central Henan province, ordered a state-owned company to buy up to 10,000 existing homes on the condition that the sellers use the money to buy newly built properties.

But that will offer little help for people such as Zhao, who are sitting on property portfolios that would be a source of riches in many countries.

Zhao has moved away from the village, heading to the nearby city of Changchun, where there are more job opportunities. She said her property portfolio could be worth as much as $500,000, if only she could find a buyer.

And when she does sell, she has no plans to put the money back into China’s shaky property market.

“How great it would be if I could sell them and use the proceeds to buy dollars, U.S. Treasury bonds, or bitcoin," she said.

Write to Cao Li at

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