The middle class of China has been touted as the driver behind its progress. A study from the Renmin University of China revealed that they may also become a potential driver for real estate-if not for their fortunes being trapped by it. China's middle and lower-middle class' fortunes are at risk in the highly volatile real estate market. The Epoch Times reported a press conference at the Analysis Forecast of Macroeconomic Performance of China where the National Academy of Development and Strategy of the said school said that there was an imbalance between the debt rate and the consumption base of the middle class. The debt rate was in a constant rise, while the consumption base had become dangerously weak.
This creates a phenomenon where most assets were locked up in real estate. With the middle class starting to have newfound wealth, most of them thought it was good to invest in real estate. As a result, the middle class finds most of their income tied up in investments toward real estate properties and have little to show for in consumption. This is why, as Mansion Global showed, there are a great number of Chinese in North America. Most of the properties in the region are up for grabs, and the Chinese have the money. Vancouver communities' single-detached homes are prime targets for these new middle-class income owners, some of which are chasing a dream toward greener pastures and better opportunities for their families.
Andy Yan of the University of British Columbia made a study which showed 66% of Vancouver's home buyers were of Chinese descent. In America, The National Association of Realtors' study showed that about $28.6 billion of real estate money coming into the country were from the same middle-class which were buying up properties.
While on one hand, it looks good, in the other, the Chinese homes could turn out remaining unused. The value of middle-class income in China truly laid with food and services, not tangible properties like homes. The phenomena could happen as soon as 30 years from now, where purchasing power will fall dramatically to adjust to the trend.
To sum it all up is what Qingdao University Economics professor Yi Xianrong said. The market value of the whole of China compared to the US, the EU, and Japan, in real estate, is $65 trillion to only $60 trillion-a false indicator of an increase in wealth