The Chinese government is renewing its push to enhance the country's growing housing rental market with a substantial investment in the sector. Local media reports have announced that China is planning to invest up to $5.82 billion over the next three years on various initiatives aimed at bolstering the housing rental industry.
According to a report published on Wednesday, the Chinese government has chosen 16 major cities to participate in a program that will grant them up to 13.4 billion yuan, or $1.95 billion, each year as a reward and subsidy to further develop their housing rental market. The budget for the program will reportedly reach up to 40.2 billion yuan in three years.
The report revealed that 22 major Chinese cities have participated in the application process, with only 16 of them being selected to take part in the pilot program. The project is being led by the country's Ministry of Finance and Ministry of Housing and Urban-Rural Development, which was also the agency that headed the evaluation process.
The cities that will be receiving the financial subsidy and support are mostly first and second-tier Chinese cities such as Shanghai, Beijing, Shenzhen, and Guangzhou. The cities that were chosen apparently had the strongest demand for rental homes with millions of people moving in and out of different areas. Majority of the cities that were chosen were those located in Eastern China such as Nanjing, Hangzhou, Fuzhou, and Xiamen.
China's Ministry of Finance and Ministry of Housing and Urban-Rural Development chose the cities based on the number of new rental houses available and the number of new residents moving into those rental homes. Other determining factors include the availability of housing rental information and the availability of platforms related to the industry.
The goal of the government's drive to bolster the housing rental market is to lower the cost of renting homes, while at the same time make the business profitable for homeowners. According to data from property gatherers, a one-bedroom apartment in first-tier cities typically costs a person 60 percent of his or her income. This climbs to around 90 percent in cities such as Beijing and Shanghai. Due to the cost, most people will opt to share an apartment with others, dropping the cost to around 30 percent of their income.
The importance of reducing costs for new tenants, especially graduates flooding into major cities to get better job opportunities, is vital in boosting the country's economy. The program hopes to accelerate the establishment of a better framework to bolster home renting and buying in the pilot cities, which in turn will benefit the Chinese economy as a whole.
