Most people renting houses and living in big Chinese cities feel that the current rents are too high to afford. Indeed, rent in big cities usually will cost at least 50% of the after-tax wages eared each month.
According to relevant custom international, the rental/sale price ratio will be used to measure the real estate operation and rental price of a region (monthly rent per square meter of usable area / sale price per square metre of structural area). The average international reasonable rental/sale price ratio is between 1: 200 and 1: 300, which means that, under reasonable circumstances, loans can be recovered if the house is rented for 200 to 300 months. However, currently in the big cities in China, due to the stubbornly high sale price of real estate, such ratio is far beyond the reasonable range, for example, the ratio in Beijing is amounting to 1:600, which means a landlord in Beijing will have to obtain 600 months rental to recover the expenses on buying the house. Under such circumstances, how could it possible for a landlord to lower the rental!?
The purchase restriction policy of the major cities in China makes those people who are not qualified to buy a house in such cities choose to rent and live there, and the huge cost on purchasing houses makes those qualified people retreat from the sales market. According to relevant statistics, in 2010, the average age for a person to buy his/her first house in Beijing was around 27, and a university graduate may afford a house in Beijing with his/her own salaries after 5 years working there. However, now in 2018, the growth of income lags far behind the growth on sales price of houses, a university graduate who has worked for 35 years may still not be able to buy his/her first apartment, and thus he/she can only keep on renting for a living in Beijing.
At the same time, due to the implementation of the policies of housing purchase restriction and rental market clean-up, the number of rentable houses has dropped sharply, which has exacerbated the shortage of supply in the housing rental market, so the rent has been continuously stimulated to go up.
In addition, since 2015, real estate developers, brokerages and hotel groups began rushing into the long-rented apartment market. It was spotted that up to March of 2018, there are more than 1200 brands of long-rented apartments in China, with a supply of more than 2.02 million apartments. These renting giants holding huge supply and funds by grabbing rentable apartments from landlords to make themselves dominant in the market and control the rental price in big cities. Since there will be a constant demand for housing in big cities, and people who have such demand will have to be controlled by those renting giants and pay for the soaring rents, and the actual transaction prices will continue to drive up expectations of landlords and brokerages on higher rental income and will cause rents to skyrocket.