China’s urbanization drive may be drawing to a close — and that could further hurt the already ailing property sector, according to China economist Hao Hong.

“Fixing the property sector may be a multi-year or even a decade’s work in front of us. Reason being, we built way too many housing for Chinese people,” the chief economist of Grow Investment.

“Also the Chinese urbanization process, which has been progressing very fast in the past 10 years, is coming to a halt,” Hong added.

China’s property market has been embattled by faltering consumer confidence, as property giants Evergrande and Country Garden are mired in debt problems. 

Evergrande, which defaulted in 2021 following a liquidity crisis, announced Friday it would delay a debt restructuring meeting which was due Monday. Country Garden is also teetering on default.

Hong noted that 18 trillion yuan ($2.46 trillion) worth of Chinese property were sold two years ago. He said managing 10 trillion this year, or five to six trillion yuan worth of sales further down the road, would be considered “lucky.”

China’s August new home prices dipped 0.3% month-on-month, extending the real estate slump. The figure also marked a 0.1% drop compared to a year ago.

Just over the weekend, a former Chinese official warned that China’s population of 1.4 billion would not be able to fill the unoccupied apartments across the country.

“There is now an oversupply of real estate … 1.4 billion people may not be able to live in them,” said He Keng, a former deputy head of China’s statistics bureau. He was speaking at a conference, according to local media reports.

China’s post-Covid economic recovery story has been disappointing, although August retail sales and industrial production data picked up pace with better-than-expected growth.

“Once people reset their expectation, and also the economy [restructures] to regrow from other industries rather than relying mostly on the property sector for growth, then we will actually have a better, much healthier Chinese economy than before,” said Hong.

“Not having an overbearing Chinese property sector actually is good for the Chinese economy going forward.”