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The Current Rental Market of Beijing: Supply Exceeds Demand, Rents Fall back to 2 Years ago

Since the outbreak of the novel coronavirus pneumonia epidemic, Beijing’s rents have dropped continuously. Based on the overall decline in 2019, all the increases in the past two and a half hours have been completely taken back.

Rental Market
Rental Market

After soaring by nearly 10%, Beijing’s rents returned to the level of two and a half years ago in mid-2020.

“A one-bedroom apartment was at least 4000 in 2019, and now the average price is around 3,600. There are still many vacancies close to the subway.” Said an intermediary. On August 6, the reporter visited a chain store near the Zaoyuan subway station in Daxing District as a tenant.

At the beginning of 2018, when the reporter visited the area, the one-bedroom apartments with a monthly rent of less than 4,000 yuan were on the top floor of the old community without elevator.

The Weifang Rent Index shows that in June 2020, Beijing’s rents fell by 1.42% month-on-month, and the increase was 0.32% compared with January 2018, which is basically the same. In June 2018 and July 2019, this value reached the high point of the year, and the increase from January 2018 was 8.85% and 7.06% respectively.

Rental Market, Beijing
Rental Market, Beijing

Since the outbreak of the novel coronavirus pneumonia epidemic, Beijing’s rents have fallen for five consecutive years. Based on the overall decline in 2019, it has completely retreated all the increases in the past two and a half years. Yan Yuejin, research director of the Think Tank Center of E-House Research Institute, told the reporter that, overall, it is unlikely that Beijing’s rents will continue to decline, and stability is the main focus. There is still a market demand in Beijing. The recent graduation season may also boost rents, but the possibility of an increase is unlikely.

Oversupply

Zaoyuan is one of the important subway stations in the southern section of Line 4. It once witnessed the “hard to find a house” boom in Beijing’s rental market.

On November 18, 2017, a fire broke out in Xinjian Village, Xihongmen Town, Daxing District. Two days later, in order to prevent fire hazards, Beijing carried out a 40-day group rental apartment house management.

In an interview with the reporter in March 2018 at another subway station, Huangcun West Street, an agent from I love my family said that many customers came to the store every day to consult, but the houses were already rented out. Their daily job is to call in the store to ask if there is a room.

Listings are now no longer in short supply. “At that time, there were very few housing listings and they had to rely on looting. In 2018, there were not so many people, and there were fewer this year.” said the aforementioned chain agent. According to the official website of Lianjia, there are 231 rental houses available for rent near Zaoyuan Metro Station and 257 on Huangcun West Street. The Zaoyuan Dongli Community, which is very close to the subway station, currently has 15 houses for rent. Such a high vacancy rate was unimaginable two years ago.

In the traditional Beijing rental market, most of the people who rent in Nancheng are migrants. However, because of the accumulation of educational resources in Beicheng, the demand for housing rental in some areas is greatly affected by the accompanying school and entering schools.

During the reporter’s on-site visit, Zhang Xin (a pseudonym), an agent of a Lianjia near Huangzhuang, Haidian, told the reporter that due to the epidemic, the current supply of housing exceeds demand, and the price has generally dropped by about 500 yuan/month. Recently, he recommended a nearby one-bedroom apartment of 7,200 yuan/month to 6,700 yuan/month, and a 7,500 yuan/month to 7,000 yuan/month.

The main reason for the decline in rent was the very short opening time of Beijing schools in the first half of this year. Except for the third and third years of high school, which start on April 27 and May 11, all other grades in primary and secondary schools will officially return to school after June. However, due to the impact of the coronavirus epidemic, Beijing’s primary and secondary schools were all closed on June 17. Currently, Zhang Xin and his colleagues are looking forward to the start of school in September, “The price should be able to rise a little later.”

escaped from Beijing?

Under the influence of the epidemic, there are many reasons for the increase in the vacancy rate. In addition to the suppression of the demand for studies, the demand for tourism has also been greatly reduced.

On April 30, Beijing resumed the inter-provincial long-distance passenger transport and tour charter business that was suspended on January 26 and announced on June 6 that it could open up domestic group travel services in due course. However, a new outbreak of the epidemic occurred a week later, Beijing reentered a state of emergency, and it was not until the end of July that the inter-provincial tourism team and “air ticket + hotel” business were resumed again.

Mr. Chen, the landlord who signed the contract on the Tujia Homestay platform, told the reporter that he had to reduce the rent from 7,000 yuan/month to 6,000 yuan/month because the number of people entering Beijing dropped sharply during the epidemic.

Another important reason is that more and more “North Drifters” choose to leave, and the demand for long-term rentals has decreased. A landlord said that the tenant who had directly rented his house for five or six years had recently moved to Tianjin with his family, so he had to rent the house to an agency again.

According to the Shell Research Institute’s “Insight Report on Housing Rentals for the Graduation Season in 2020”, Guangzhou, Shanghai, Beijing, and Shenzhen are still ranked among the top four preferred employment cities for graduates. However, as the employment market for Beijing graduates is greatly affected by the epidemic, Tianjin relies on Geographical advantage has become the biggest winner to undertake the spillover of Beijing students.

In the past three years, the number of permanent residents in Beijing has been decreasing. According to statistics in the last three years, the permanent population of Beijing in 2017 was 21.707 million, a decrease of 22,000 from 2016; the permanent population in 2018 was 21.542 million, a decrease of 165,000 from the end of 2017; the permanent population in 2019 was 21.53 million 10,000 people, a decrease of 6,000 from the end of 2018.

According to Zou Linhua, a researcher at the Chinese Academy of Social Sciences’ Institute of Financial Strategy, the decline in rent generally reflects the decline in economic growth. At the end of July, the Beijing Municipal Bureau of Statistics announced the economic performance in the first half of the year, GDP reached 1,620.56 billion yuan, down 3.2% year-on-year.

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Nancy Huang
I'm a journalist in Shenzhen, China. I have been working in several news agencies in China since 2008.

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