Rent rises as buyers, sellers wait for price change

10:13, June 12, 2010      

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Rent went up in five major cities last month, a sign that the governments' policies aimed at cooling off prices are encouraging homeowners to rent out apartments as buyers wait until houses become more affordable.

Average rent in Beijing last month was 2, 924 yuan ($428.07) per unit, up 1.9 percent over the previous month, the Beijing Municipal Bureau of Statistics said Friday.

And rent in Shanghai, Guangzhou, Shenzhen and Tianjin increased 0.25 percent, 1.01 percent, 1.33 percent and 0.26 percent month-on-month respectively, according to the data filed with the research center of Centaline China, a real estate agency.

The rise might seem small overall but in Beijing, high-end residences saw a rent increase of 7.8 percent over the previous month, Centaline said.

"Potential homebuyers who are waiting to see a drop in home prices have resorted to renting larger apartments temporarily," said Song Qinyu, a researcher at Centaline.

Homeowners who had planned to sell their apartments had to rethink their strategies due to the price declining, said Song. They have to rent out their apartments, albeit at higher rates for the time being, while they wait for the housing price to rebound.

"A homeowner who already had two apartments and planned to buy a third unit turned to renting his apartment out because of the tightening of credit policies," said Yang Xiujuan, an employee at Century 21 China's branch office in Beijing.

Purchasers looking to buy second houses had to make down payments of no less than 50 percent of the total value of the properties, with an interest rate 1.1 times China's benchmark rate.

Commercial banks also could suspend granting loans to buyers who want to buy third houses to control financial risks, according to the central government's guidelines issued in April.

The number of houses for rent in May increased 26.8 percent month-on-month, with tenants seeing a 31.2 percent increase, according to Centaline. The company's research also showed that prices of existing houses in the five first-tier cities have already begun a downward slide.

Source: Global Times


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