Why rents in China’s top cities are unlikely to see that midyear rise
- Local governments in cities such as Beijing, Shenzhen and Chengdu have cracked down on price increases by rental apartment operators
- Fresh graduates prefer to rent rooms instead of entire flats to keep their overall costs down
Rents in China’s top cities, which rise every summer on the back of an influx of fresh college graduates joining the workforce, are unlikely to increase by much this year as they have reached the upper limit of their affordability and received warnings from local governments, market observers say.
Average monthly rent in first-tier cities such as Beijing have stayed flat at 90 yuan (US$13) per square metre in the first three weeks of June, little changed from the same period last year, according to property listing and data service Zhuge.com.
This is in contrast to last summer when average rents jumped 7.8 per cent in the May to August period. Similar increases were also recorded in Shenzhen and Chengdu after the local governments tore down substandard flats on the cities’ outskirts, higher prices from rental apartment operators following upgrades and refurbishments and the rush of graduates.
“Rental apartment operators’ price-driven expansion has halted because of more intense government oversight, and their high prices exceeds ordinary renters’ affordability,” said Yang Yajing, an analyst with Zhuge.com. “Renters’ income growth too has been unable to keep up with the previous surge in rents.”
Last year’s intense price war among rental apartment operators for bulk leases sparked widespread uproar, prompting local governments to step in who demanded that they add flats without increasing rents.
