China’s Real Estate Doom: 40-Year Mortgages Forced, Homes Demolished Instead Of Price Cuts

Have you ever seen 15 apartment buildings demolished at the same time? In just 45 seconds, these buildings, worth more than 1 billion yuan, were reduced to rubble. This was the controlled demolition of the unfinished Liyangxincheng development in Kunming. To bring down the abandoned buildings that had remained unfinished for eight years, the construction team used 8,500 blast points and placed 4.6 tons of explosives. About 2,000 households, or more than 5,300 residents, were evacuated from the surrounding area. The demolition looked like a scene from a blockbuster movie, with thick clouds of dust and deafening explosions. Many people who saw the footage said it was heartbreaking. This was not just the demolition of buildings, it was a public display of a systemic failure, a collective judgment on failed regulation, capital greed, and the collapse of people's livelihoods. Why did these 15 buildings have to be demolished? China's first-generation internet celebrity Feng Jie once made this statement. She said a real estate developer named Ren Zhiqiang once said that to ensure his properties remained profitable, he would rather destroy unsold apartments than to sell them to poor people. She said, I don't believe I can afford to buy a home in the city. I don't think my parents, my brothers or my sisters can afford one either. An apartment costs 1 million yuan, but migrant workers only earn 2,000 to 3,000 yuan a month, and even after working for a year, they may not even receive their wages. As the real estate market collapsed and the economy continued to slow, more and more people have been unable to keep up with their mortgage payments. I regret buying a home. A few years ago, I spent more than 2 million yuan on this apartment. I just checked again, and now similar units in the same community are selling for 1.3 million and nobody wants them. I also borrowed more than 1 million yuan in loans. I have to pay back more than 5,000 yuan every month, and I still have 28 years left. Now I'm thinking, if I sell this apartment, I might get only a little over a million yuan, which would barely cover the mortgage. That means more than 700,000 yuan has simply disappeared. Although I thought I could earn at least 1 million or 2 million yuan in my lifetime, I made a decision in October 2022 to buy a home here. I lost my parents' lifetime savings. We paid more than 1 million yuan, but now it can be bought for just 400,000 yuan. How much savings do my parents even have? I thought buying a home was the bravest decision I had ever made, but I never expected it could become a bottomless pit. When I heard today that someone bought the same home for 400,000 yuan, the one I paid more than 1 million yuan for, I felt terrible. I really did. The worst part is I don't even dare tell my parents. If I told them, they would be heartbroken and upset. I still owe the bank more than 400,000 yuan. Combined with the collapse in home prices, I've lost about 1 million yuan in total. Sometimes people have to pay the price for their own impulsive decisions. I'm the most miserable mortgage slave, and I'm heading out. Five years ago, I borrowed 1.17 million yuan from the bank. Now my home is worth only 700,000 yuan, and nobody wants to buy it. I want to sell the house, but I still owe the bank 1.1 million yuan. My monthly income is 6,500 yuan, but my mortgage payment alone is 5,080. I'm such an idiot. Such an unlucky person. I'm going out to clear my mind. It's so cruel. What do you think I should do? What can I do? Some people say that if we get through the next year or two, things will get better, and the future will definitely improve. But I keep wondering if anyone will step in and help people like us. I'm really struggling. I'm going to have barbecue, and after that, I'll go around the night market collecting bottles to sell, and help cover my living expenses. The payment due on the 20th has already been deducted, and now another payment is due on the 29th. I'm so anxious. Oh my god, never take on a mortgage if you can avoid it. Otherwise, you'll regret it when it's too late. Where are home prices the cheapest in China? Some people say it's Hegang in northeastern China, but that's completely wrong. It's Panjing, Liaoning province. Here you can buy a home for 20,000 yuan. The buildings are a little old, but they are cheap. On August 28th, the People's Bank of China and the National Financial Regulatory Administration jointly issued a new real estate policy, mainly covering housing sales and financing for property developers. First, the maximum term for personal housing loans has been extended from 30 years to 40 years. Officials said the policy aims to reduce delivery risks through the sale of completed homes, while 40-year mortgages can lower monthly repayment pressure. Second, the new policy also raises the requirements for pre-sale housing. For commercial housing projects to enter pre-sale, the main structure of each building must be completed and topped out. Specific requirements must be determined by local governments based on actual conditions. Completed home sales will be subject to registration management, with a push-first system where buyers receive property certificates at the same time as they receive their homes. The decades-old model of pay-first-receive-the-home-later is now facing a systemic phase-out. This means the history of buying unfinished homes could be completely rewritten. Most people buy homes at around age 30. Under the previous 30-year mortgage system, borrowers could finish repayment around retirement age at 60 and enter retirement debt-free. But with a 40-year mortgage, some people could still be making payments until age 70. The extension of housing loans to 40 years has triggered intense debate across China. You don't start having enough money for a down payment until you're 30 years old. Then you take out a 40-year mortgage. By the time you finish paying it off, you might already be gone. How am I supposed to describe this miserable life? I don't have a mortgage. I don't have a car loan. And I don't have children. My goal is simply not to put pressure on myself. Extending the mortgage term doesn't mean you pay less money. It only stretches out the repayment period. The total interest will actually increase. For people who already don't have the money, this makes them even poorer. Then you might as well rent a place. Why would anyone want to carry a 40-year old debt? I just don't want to take on a mortgage. If I buy a home at 30 and repay it for 40 years, I might still be paying when I'm in my 70s. You're still paying off the loan, but you're already halfway into the grave. At that point, you just want to lie flat and give up. You people really know how to play the game. I thought they would keep lowering mortgage rates to reduce the pressure on ordinary workers. But I never expected a policy allowing mortgages to be extended to 40 years. Who came up with this idea? At the current 3.15% interest rate, if you borrow 1 million yuan over 40 years, the total repayment would reach an astonishing 1.817 million yuan. Compared with a 30-year mortgage, which would cost 1.5 million yuan in total repayments, extending the loan by 10 years means paying an extra 220,000 yuan in interest. If it were you, would you extend the mortgage term? Tell us in the comments. Do you think the new policy benefits banks? It definitely benefits banks, because the longer you repay, the more interest banks collect. So if it benefits banks, then from another perspective, it may not necessarily be good news for others. That's how I see it. The second change is that under this new real estate policy, people can only buy homes after they are completed. Previously, people bought unfinished pre-sale apartments. But what is the situation now? The current real estate market is a buyer's market. Buyers have the power. If a home isn't finished, would you even go see it? Nobody would. In Shanghai, many new housing projects in different districts are already completed. But many units still haven't been sold. When you go to view them, real estate agents take you directly to the finished buildings. So this policy is only a new adjustment. But I don't think it can solve the current problems facing the real estate market. Whether ordinary people are willing to buy homes mainly depends on whether their jobs are stable and whether their income can continue to grow. If people have no clear goals or confidence about the future, even a longer repayment period cannot eliminate their anxiety. A 30-year mortgage already covers almost an entire person's working life. Extending it to 40 years means people could retire while still carrying mortgage debt. During the years of rapid growth in China's real estate market, ordinary people were willing to take on heavy debt to sign 30-year mortgages because most believed that they would not actually need the full 30 years to repay them. Many would pay their loans early. And because home prices kept rising, they could sell their properties after just a few years and eliminate their debt. But amid the current economic slowdown, many people are choosing not to buy homes. It's not because they're short a few hundred yuan in monthly payments. The bigger issue is that they lack confidence in whether home prices can remain stable, whether the overall economy can continue growing, and whether their own incomes can increase or even remain stable. One user said, who can predict what will happen 40 years from now? Who can guarantee they'll still have a job 40 years later? You can't use today's stable job situation to assume your job will be With the current employment situation, many people have already turned to flexible work. Asking people to carry a 40-year mortgage is simply too much. In reality, the so-called burden reduction from the new housing policy is actually more accurately described as spreading today's pressure over a longer period of time. More importantly, the real problem facing the property market is not just the size of monthly mortgage payments. In the end, real estate depends on population. China recorded only 7.92 million births last year. If the children born today enter adulthood 20 years from now, what kind of housing market will they face? Many families already own homes. Two decades from now, young people may inherit several properties left by their parents and grandparents. How much motivation will they still have to buy homes? Even for those without inherited property, supply may still exceed demand. Large amounts of Rents can adjust with the market, but 40-year mortgages will not automatically become cheaper just because market conditions change. Lowering mortgage rates would be a better approach. It's worth noting that the latest real estate policies promote the sale of completed homes, extend mortgage terms, and adjust financing rules for property developers. The new measures aim to reduce the risk of unfinished housing projects in the future. However, they do not explain how the massive numbers of existing unfinished buildings will be handled. For buyers trapped in the situation of having a mortgage but no home, the new policy still does not answer who will bear the losses left by previous unfinished projects. The system is focused on preventing the next unfinished housing crisis, rather than resolving the unfinished projects of the past. Now let's look at the despair of those homeowners who spent their entire life savings only to end up with unfinished apartments. One homeowner bought an unfinished apartment. After losing his job, he had to pay the mortgage while also renting another place to live. Eventually, he ran out of money. He was forced to move into the unfinished building. To his surprise, more than 4,000 households had made the same decision. The unfinished apartments had no windows. In summer, mosquitoes were so bad that people could barely sleep, so they had to cover themselves with blankets. The staircases had no railings, and one wrong step could lead to a fatal flaw. Some families even brought their children to live in the unfinished building. Without electricity or lights, the children had to finish all their homework before dark. Even with the brightest solar lamps they could find, the entire room remained extremely dim. To cook, residents had to walk one kilometer to a small river to collect water, then climb up to the 18th floor in the dark. Even using the bathroom was a major problem. Some elderly residents lived above the 10th floor and had to climb up and down every day. When asked why they didn't move to a first-floor apartment somewhere else, one resident said, living in my own home feels much more secure. On the walls of the unfinished building, someone wrote, I just want a home. It doesn't need to be big, a place where I won't be afraid when I feel frightened. After living in the unfinished building for more than three months, a female homeowner cried as she shared her feelings. This has been the happiest thing for me in the past three months. Everyone moved in, not for anyone else, but for their own homes. When I earn money, I'll donate a generator for everyone, and then we'll be able to take showers. We won't have to suffer from not being able to bathe anymore. This was the real situation faced by homeowners at the unfinished Kuiming Biyang, Xingfu City development. At the time, the developer's funding chain collapsed and construction stopped. After financial and housing pressure, some owners had no choice but to move into their shall apartments without water or electricity. The comment about earning money to donate a generator was truly heartbreaking. The most ironic part is that developers could stop construction, government regulators could fail in their duties, and banks could continue demanding loan repayments. The only party that could not break its promise was the homeowner. Unfinished buildings are not simply failed construction projects. They represent a collapse of trust and a breakdown of the system. They reveal a harsh reality. In the home buying chain, ordinary people are the ones left carrying the burden. The deepest despair is not living in an unfinished building, but knowing the situation is unfair while still having no way out. Chinese affairs expert Mike Lee recently told the Epoch Times that it is too late to introduce new policies now because large numbers of unfinished homes have already appeared. He said the three red lines policy introduced years ago caused many private property developers to face funding crises and added that if the new policy had been introduced earlier, the losses would have been much smaller. This highlights the timing challenge facing the policy. As authorities begin redesigning a system to reduce delivery risks for homebuyers, millions of families have already paid the price. In recent years, Chinese authorities have repeatedly emphasized ensuring housing delivery and the number of homes that have However, the latest policy does not provide a nationwide list of existing unfinished housing projects, nor does it reveal how many homes previously faced delivery risks or how much financial loss buyers have already suffered. Currently, millions of unfinished homes across China remain stalled for long periods. The slow recovery momentum in new home prices in major cities like Beijing and Shanghai has already slowed. In smaller inland cities, second-hand home prices have fallen by more than one-third compared with 2020 levels, further weakening household willingness to spend. Market estimates and public data suggest that the scale of the problem may be far larger than official disclosures indicate. According to figures cited by Sena Finance, by the end of 2024, 1,660 property developers nationwide had filed for bankruptcy and 10 listed property companies had been delisted. That same year, the total floor area of unfinished housing projects exceeded 250 million square meters, involving around 8 million homes. Although these figures use different statistical methods, they all indicate that the issue is not limited to a small number of delivery failures, but reflects a large accumulation of risks during the real estate sector's deleveraging process. The sale of completed homes addresses future risks, but it cannot directly resolve past risks. For families who have already started mortgage payments but still have not received their homes, institutional reforms may be too little too late. As Mike Lee said, this kind of campaign-style new policy cannot change market expectations or recover wealth that has already been lost. Its actual impact is more focused on providing relief to local governments and financial institutions. Sam Rodwan of Chicago-based real estate consulting firm Enhance International told Reuters that China's existing housing supply has already exceeded the number of households. It's a systemic problem that's difficult to resolve.