Beijing Rent Spikes as New Tertiary Graduates Throng the Housing Market

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A sudden spike in rental levels in Beijing has compelled the municipal authorities to crack down on home accommodation providers.

Within the space of a week Beijing’s municipal housing authorities have summoned and issued reprimands to executives from several leading home rental companies including Ziroom and Danke, following reports of large-scale rises in home rental levels around the Chinese capital.

In addition to stressing the “three can’t’s” (三不得) and the “three strict inspections” to home rental providers, Beijing authorities have also called for a vigorous increase in the city’s supply of rental accommodation.

On 22 August Beijing confirmed the addition of 5,000 rental apartments in the three districts of Xicheng, Haidian and Fengtai, while the following day it also set the target that nearly 10,000 homes be allocated by the end of the year.

The Chinese central government announced last year that expansion of the home rental market would be one of the key planks in its nationwide property policy.

Chen Lei (陈雷在), chief analyst with the Zhuge Zhaofang Data Research Centre (诸葛找房数据研究中心) said to Securities Daily that the chief reason for the rapid rise in Beijing rent of late has been a severe supply-demand imbalance, with demand greatly outstripping available housing as workers and fresh tertiary graduates continue to enter the city.

The large volume of tertiary graduates entering the market after July has had an especially strong impact on demand, serving to significantly drive up rental levels.

Chen further points out that since the end of 2017 the authorities have cracked down on illicit forms of housing supply on the periphery of Beijing, including illegal construction and certain forms of group rental homes, resulting in a marked decline in short-term housing supply.

Yang Xianling (杨现领), head of Beike Research (贝壳研究院), says the spike in rental levels is seasonal however, forecasting a marked decline growth in September after the peak in transactions levels during July and August.

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