The recent policy in 2022 will bring a small rise in the second-hand housing market in China’s first-tier cities, but it is followed by news that the rental market in Shenzhen has fallen sharply. Voices online have pointed out that rental prices have fallen back to where they were four years ago. In addition to Shenzhen, many cities such as Luohu and Futian are facing the phenomenon of falling rents. Many netizens make judgments from the macroeconomic and policy level, but we can directly understand the future trend of China’s rental market from the relationship between supply and demand.
Base on China Market Overview | Which counties affected the most? when we released it last time, we can see that Shenzhen has always been a popular city for young people, because compared with other big cities such as Beijing and Shanghai, Shenzhen has a low landing threshold, which has created a large influx of young people. Shenzhen is looking for opportunities, and it is true that due to the epidemic, a large number of people have lost their jobs. The relatively high-quality young people have accumulated enough wealth to buy a house in the past two years, while some young people who are unable to get a car have become the so-called “floating employment population”, and even renting has become a difficult thing.
At present, there are only two ways for investors who still hold Shenzhen real estate for investment to withdraw cash.
1. Reduce rents so that the floating population can afford to rent houses.
2. Put it on the market and let other capable investors buy the house.
However, how much does the rent reduction need to be in order to balance each other’s needs? At present, the market for selling second-hand houses has become more difficult, and even if they are successfully sold, it is difficult to convert them into international currencies such as US dollars.
How can we observe the future trend of China’s housing market from Shenzhen?
In the future, China’s first-tier cities will be more focused on absorbing new laborers, such as the “floating employment population”, who will be engaged in alternative jobs, which will lead to a further decline in the labor force. The property market in second- and third-tier cities and below will face a downturn, while first-tier cities will see a spike in housing prices. At the same time, the first-tier cities see the rise of the “mobile employment population”, who will also be engaged in alternative jobs, and one day in the future, they may be replaced by machines. At that time, they will lose their source of income and will not be able to continue renting, which will further cause the rental market to decline, causing China’s property market and rental market to face a polarized situation.
To sum up, from the perspective of the next 30 years, China’s overall housing prices will rise slowly, which will keep pace with the rate of inflation. It will not witness dramatic annual rises as in the past. In the future, housing prices will rise by 4%-5% a year. Yes, but the mortgage interest rate will be higher than this price increase. For real estate speculators, it is a stable investment channel. However, in the next 2-3 years, housing prices will still move sideways or even fall. First, the global economy will be dragged down. Second, the current inflation will be much higher than in the past few years, so only the housing prices in core cities and core areas will be firm or even strong. More and more real estate owners will have to cut prices or stagnate them for a period of time. But what is certain is that in the future, China’s housing prices will not have such a period of skyrocketing as seen in 2010-2018, but there will also be no plummets. In addition to paying attention to China’s real estate market, we should also focus on overseas markets. We will continue to update the latest news of real estate at home and abroad.
Whatever is your preference, Denzity is here to help you make a better decision. Our Portal lists many overseas properties managed by trusted real estate companies all over the world. If there is a place to find your dream home this would be it! Watch out for upcoming videos that will take a deeper dive into the area.
To receive more property information relating to the UK, Canada and Hong Kong, sign up to our newsletter at the bottom of this page.
Follow us on: