Apartment rents in China fell in the second half of last year, mainly because of a high concentration of affordable rental homes in the market and the lack of demand brought by population mobility. The four Chinese first-tier cities were among the most affected.
Rents in Shanghai fell the most as of Sept. 30 last year, down 2.1 percent from June 30 and 2.9 percent from a year earlier, according to the housing big data monitoring system released by the Beike Research Institute. Rents in Beijing and Guangzhou declined 1.3 percent as of the end of the third quarter from the end of the second one, remaining basically the same as a year earlier. Meanwhile, housing rents in Shenzhen fell 0.9 percent quarter-on-quarter.
As of the end of the third quarter, China’s housing rent index of 40 key cities dropped 1 percent from the end of the previous quarter and 0.7 percent from a year earlier, according to the Beike Research Institute.
Shanghai began to sell rental housing land in 2017 and can now provide more than 250,000 affordable rental housing units, which are more popular among tenants than individual landlords because of their good location and low price.
Zuo Wen, the landlord of a 50-square-meter one-bedroom apartment in Shanghai’s financial district Lujiazui, told Yicai that in the past, he was charging CNY6,500 (USD910) per month, but after the tenant moved out in the fourth quarter, the apartment remained empty for one month as nobody was interested. Now, the listing rent has dropped to CNY5,500, Zuo noted.
The main reason for the fall in housing rents is the lack of demand caused by population mobility, said Lu Wenxi, senior analyst at Centaline Property Shanghai. Moreover, rent is related to house prices, so if house prices fall, rents follow suit, Lu added.
Second-hand house prices in Shanghai, Beijing, Guangzhou, and Shenzhen declined 1.5 percent, 1.4 percent, 1 percent, and 1.5 percent, respectively, in November last year from the previous month, according to data from the National Bureau of Statistics. As selling second-hand homes is difficult, landlords opt for temporary rent. This leads to more houses entering the rental market, which in turn results in lower rent prices.
