ome rental prices have soared in China's megacities in recent months – and went up a staggering 25.8 percent year on year in Beijing in the month of July. Some blame a group of large long-term rental companies like Ziroom, operated by a giant property agency Lianjia, saying their willingness to outbid competition to buy up housing stock to rent for a profit has fuelled the growth, the China Youth Daily
In a commentary, Yang Xinyu writes that there is cutthroat competition between some operators, but this alone has not been enough to cause prices to rise across the board. He says the blame lies with the distorted relations between supply and demand in the rental market.
In recent years, first-tier cities demolished various old compounds where many residents once rented homes. Given there was no drop in the working population, a disequilibrium in supply-demand relations emerged, he says.
As long as house prices keep rising in first-tier cities investors will not care about low rents – as the increase provides a significant return, Yang writes. But at present, due to stabilizing and even decreasing home prices, the potential of rising return from housing investment seems to decline. It is natural for landlords to up rents. Notably, rents have grown at a far lower rate than home prices in first-tier cities.
The key to curbing excessive increases lies not in attacking long-term rental apartment operators, but increasing supply and giving more bargaining power to tenants, the commentator concludes.