In June, for the first time in Beijing for at least 20 years, according to a study by Century 21, rents show a general decrease, -5% compared to June 2019, the price per square meter reaches 84.4 yuan (In Paris, the average price per square meter is 32 euros according to the site Seloger.com -255 yuan). Figures for 18 major cities show an average drop of 10.9%. What are the causes?
The market winter
Chinese New Year falls at the end of January or early February. February, traditionally the best month for renting, due to the epidemic, did not show the usual good figures. The improvement of the health situation and the return to work has made it possible to review an almost normal demand for rentals. The other good rental period is in the early summer when new graduates are looking for a new job. In the present circumstances, the assignment takes longer. It directly influences transactions, which declined in the first half of the year, 23% in Beijing, 30% in 12 other major cities surveyed and up to 60% in Wuhan and Hangzhou. Rental vacations increased significantly, reaching 50 days in June, 12 days more than last year. Rising unemployment is also weighing on the market.
The drop didn’t wait for COVID in Beijing
New graduates have been driving the market in previous summers, but this year, the 20-25-year-old population accounts for 17.7% of demand and is not responding.
The reasons are not all due to the epidemic, the sector was already showing a downturn in the second half of 2019, and the increase in rents could not continue. The square meter rose from 2012 to 2020 from 51.3 to 84.4 yuan, an increase of 64.7%, with two periods at over 10%, 2013, and 2016-2017. The decline had already started as early as August 2019.
After crazy growth over the last twenty years, the Chinese economy finds a more comfortable pace, and of course, readjustments (the famous 调整 in Chinese) are taking place. Is this temporary, or is it a lasting trend? The decline in population is an essential factor. Beijing’s government has successfully implemented measures to contain population growth; the capital has recorded a decrease of 200,000 people in three years, see the article.
16 July 2020