It is a wheezy question that whether it is better to buy houses or rent houses. However, as renting is increasingly concerned by people, the renting era has kicked off as everyone having house to live in doesn’t mean everyone having house property.
Dispute over houses around high-quality education resources
Recently, Guangzhou government released a proposal on accelerating development of house rental market. The new rental policy includes 16 rules and provides unprecedented supports from various aspects. The highlight of the greatest concern lies in that the policy gives tenants equal rights to education resources as homeowners. In addition, Guangzhou will positively support house rental, move quicker in establishing housing system in terms of both house rental and purchase; encourage development of modern rental industry and give birth to new economic growth driver; and regulate house rental market and consolidate house foundation for long-term and sound development of economy and society.
The new policy triggers dispute over high-quality houses near schools. Some fear that rents around very good schools will soar upon introduction of the new policy, but prices of houses around school area will cool down. On the other hand, the fact that education resources are lacking remains unchanged. The housing prices are likely to surge accordingly due to the increasing demand for houses near schools but no additional supplies. However, the new policy offers opportunity for children of tenants to enter famous schools. Detailed implementation will depend on the interpretation of relevant authorities of Guangzhou.
It is undisputable that houses next to education resources are always popular in many big cities. They are a kind of commodity like ordinary commercialized houses, but they rare more rare. Their prices are staying at a high level in Shenzhen. The reporter finds that as education quality of four famous schools in Shenzhen is very good, prices of houses, even very old, around these schools are over 70,000 yuan per square meters, while others have been over 100,000 yuan per square meter since long time ago.
In fact, the policy entitling children of tenants to enroll in nearby schools is carried out in many cities in recent years. For example, state-run primary schools in Futian district of Shenzhen adopt integral entrance system in 2017. If both tenants and homeowners have Shenzhen household registration, the score difference will be 15 points. But some parents in Shenzhen told the reporter that under general condition, children of tenants can go to ordinary schools. But if they want to go to famous schools, the 15 points will be significantly influential. Zhang Tianming, research manager from Midland Realty, said that whether the policy proposed by Guangzhou offering the equal rights to tenants and homeowners needs explanation from authorities.
New logics adopted in real estate market
Speaking of real estate industry, people’s first response is regarding it as commercialized house market. They don’t know much about the rental market.
Regardless of dispute over houses near education resources, the proposal of Guangzhou paid attention to equal rights as well as clarified implementers. Previously, some tier-1 cities like Shanghai, Shenzhen and Beijing introduced policies to quicken development of house rental market. The policies were more intensified and more efforts were given to implement them then before. This implies that house rental market has become a “delicious cake”.
General Office of the State Council issued several opinions on boosting development of house rental market in last June, which clearly proposed to support construction of rental houses. Rental market gains state-level support and relevant policies have been implemented since last year.
According to the 13th Five-year Plan on house market development of Shanghai, the number of new houses will rise by about 60 percent during the 13th Five-year Plan period than that during the previous five years in the city. It is expected that 700,000 new houses for renting will be supplied in industry cluster district, traffic hub and merchant-operated areas. Two pieces of lands located in Pudong New Area and Jiading district listed in Urban Planning, Land & Resources Commission of Shanghai Municipality in early July are only available for rental but not for sales. This kind of operation model first happens in Shanghai.
Urban Planning, Land & Resources Commission of Shenzhen Municipality recently unveiled a plan on housing construction in Shenzhen in 2017. It proposed to quicken development of house rental market, regulate market order, cultivate diversified and professional house suppliers, form house consumption model, and build housing supply system. The consumption model with renting house first and buying houses later is undoubtedly the most optimal choice for Shenzhen giving consideration to land & houses and urban competitiveness.
Nowadays, the rental market bourgeons, indicating that under the background with insufficient supplies of land, residential building and public resources and high housing price, the era of solving housing problem by purchase has passed. Yu Liang, chairman of board of director of Vanke, believed that China’s real estate industry comes across a new stage. During this stage, the real estate industry will face a reshuffle as house consumption will hike, and rental market and real estate for elderly care and education will enjoy vast prospect. The size of China’s house rental market will reach 1.6 trillion yuan and 2.9 trillion yuan in 2020 and 2025 respectively, and is expected to be over 4 trillion yuan in 2030, according to report from Lianjia.
However, it is not so easy to gain benefits from this huge market. Many problems in the rental market remain to be solved and it should experience cultivation for a period.
Will the development of rental market and increasing leasehold interest impact the high housing prices in the long run? In the opinion of Yan Yuejin, research director of E-House China R&D Institute, for tenants in big cities, the increasing leasehold interest raises the cost performance of renting houses in view of no matter economic value or social value. In addition, it helps transformation of rental market. Rental market is a good opportunity for many enterprises to operate their existing assets. Moreover, it doesn’t squeeze demands for buying houses. Therefore, it is an important measure to curb the high housing prices.
Translated by Vanessa Chen
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