China’s young generation to rent homes for better quality life
YOU+International Youth Apartment  Photo: www.sepsion.cn

China’s young generation born in the 1990s are attaching more value to the quality of life, so they may choose not to buy a house as home loans may burden their good lives, a report suggests.

About 30 percent of college graduates surveyed by the Chinese Academy of Social Sciences (CASS) said their personal living area is no bigger than 20 square meters in the first year after graduation, and they care more about how comfortably they could live than how big their places are.

Sky-rocketing home prices in the first-tier cities, together with young people’s pivot to high-quality life have contributed to the rise of youth-targeted apartments, reported the Lianhe Zaobao on Tuesday. Some industry insiders told the Singapore-based Chinese newspaper that, if the proper business mode and government support are in place, the upscale rental apartments could help contain home prices in many big Chinese cities.

Liu Hui, 25, a private company employee has just moved out of her place to a youth apartment with a rent of 4,200 yuan per month. Although the bedroom that Liu rented is not bigger than 20 square meters, she regards it a good bargain because of its quality. “Although I need to pay an extra 1800 yuan per month, the comfort and amenity that comes with it is worth the price,” she told the Lianhe Zaobao.

Liu’s choice is now common among China’s young people and that was reflected in the CASS survey. “In conclusion, the young generation born in the 1990s may finally choose not to buy homes,” concluded the survey.

Although there is great need for young people to buy homes, only one-third of the quizzed said they would “lower the quality of life in order to buy a house”, while 55 percent of young people born in the 1990s chose “not to buy a house if that involves taking a big loan.”

The second-hand housing in the residential community where Liu Hui has just moved in is prices at 70,000 yuan per square meter. A one-bedroom apartment would cost at least 4.2 million yuan. “Even if my parents could pay the down payment of 1.2 million yuan, I need to pay back the monthly installment of 18,000 yuan for a continuous 30 years,” said Liu, noting if a fund of 3 million yuan is used to buy financial product, then she could earn 15,000 yuan per month.

The 40-fold housing price-to-income ratio has actually dampened young people’s enthusiasm to make a purchase. Relevant data shows that between 2013 and 2016, the average age to buy the first house went up from 30 to 34, which also suggests that young people may begin to identify with the style of ‘renting to live’.

“I don’t need to cope with financial pressure and trivial matters like fixing the toilet or changing bulbs. I could change my job, the city I live at my own will,” Dong Li, another tenant of a youth apartment said.

In 2015, there was a migrant population of 247 million; by 2020, the figure would increase to 282 million and in 2030 to 327 million, indicating that after 10 years around one-fifth of Chinese people would be migrants, based on the Chinese Floating People’s Development Report by the National Health and Family Planning Commission.

More people would begin to rent a house due to increasing population mobility. Based on a report by Homelink, China’s biggest property agent, nearly 160 million people were renting homes in 2015. And the figure is expected to rise to 190 million by 2020 and 270 million by 2030.

Young people’s preference for youth apartments has created a niche market in which major real estate developers, hotel groups and Internet companies are increasing investments.

“Tightening home purchase restrictions have led some developers to rent out their stocks that could not be sold. Reports show that one-third of the top 30 developers have stepped into apartment leasing,” said Hu Jinghui, vice president of the Basic 5i5j, one of the major real estate service providers in China.

Besides, some Internet companies have also begun to dig into the market. Alipay has joined hands with mogoroom.com, an Internet rental platform; Lei Jun, the founder of Xiaomi has invested hundreds of millions into the YOU+International Youth Apartment.

Renting a house has transformed from something people have to do to kind of an alternative lifestyle to enjoy yourself. Meanwhile, most of the surveyed made it clear that if they could afford buying, they would not rent a house. “It’s difficult for a man with no house in his name to find a girlfriend,” some girl told the Lianhe Zaobao.

The government has also rolled out policies to stimulate the rental market in bid to cool China’s overheated property markets. The State Council endorsed the property rental business in June 2016 by allowing commercial buildings to be remodeled as rental housing.

In the future five years, the capital city has proposed plans to use 0.5 million of the whole 1.5 million newly built apartments for lease. “With more houses put into the market for rent, surging home prices may be tamed,” said Yan Yuejin, the director of the E-House Research and Training Institute.   

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