Chinese Rental Property Markets Rebound From Pandemic, Driving Prices up

High and low-rise buildings near the Jinji Lake in Suzhou (Source: Schlaich Bergermann Partner)

Rental markets in key cities across China have basically recovered throughout the month of August, including an increase in the overall transaction volume for Beijing, a report showed. 

The trading volume of Beijing’s rental market continued to accelerate in August, finishing with a 12.2% increase, month-on-month. Not only did the month represent the highest trading volume since the beginning of the year, but it also reached its peak trading volume since 2019, housing platform Beike Research Institute said in a report.

The rebound in Beijing’s rental market shows that demand is abundant, said Yan Yuejin, research director at the Shanghai Yiju Research Institute think tank.

“The potential leasing crowd, especially college graduates, is large in Beijing,” Yan said. “Currently, it is the peak period for college graduates to rent houses — especially after they find employment, the rental market tends to be active.”

Yan added that the transaction peak also injects confidence into the market, especially for individual landlords.

“The number of renters asking to lease an apartment recently increased by 50% compared to previous months,” said Ma Jingxiang, a Beijing-based real estate agent, adding that “trading volume also increased by 10%.”

The report showed that rental prices in Beijing have risen steadily. After they stopped falling in May, prices have since gradually risen for three consecutive months.

In August, the average rent price in Beijing was 86.6 yuan per square meter, up 0.5% month-on-month and down 1% year-on-year .

Yan said the rebounding second-hand market also drives rental prices up. 

According to a Beike Research Institute report, the transaction volume of second-hand housing in Beijing in August has increased for two consecutive months.

“The active second-housing market means that many of these kinds of houses are sold, so fewer second-hand houses are left. Since rental houses are also second-hand houses, there are fewer listings. At this time, whether it is sold or rented, the price will be set higher.”

Real estate agent Ma admitted he felt that housing prices have increased by 5% from the levels of previous months, but now many renters are looking for property with lower prices than before the pandemic. 

Another Beijing-based real estate agent Li Zili said he felt that the rental market has rebounded in the past two months, and the number of university students looking for apartments has increased while schools and colleges reopen.

Starting from mid-January at the onset of the pandemic, the rental market’s transaction volume fell precipitously. In the traditional rental peak season of February, the rental market nearly came to a complete halt. 

“I almost had no customers in February,” Li said, “and many neighborhoods were locked, which meant I couldn’t enter the community to allow clients to view the apartments.” 

Since March, however, most parts of the country have resumed work and production, and the volume of rental housing transactions has begun to rebound.

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Another Beike research report also showed that in August, the transaction volume for leasing markets in key cities across the country declined slightly. In July, transaction volume rose 7.3% month-on-month, reaching peak levels so far this year, while August transaction volume fell 3.3% month-on-month.

The impact of the pandemic on China’s leasing market will gradually weaken, due to the steady decline in demand from the hot rental season and the graduation time period, the report said. 

In September, the market is expected to return to normal levels, and market enthusiasm may drop, the report said.