Development of a long-term solution to the country’s housing difficulties is expected to advance substantially in 2018, with long-term leasing one of its highlights, industry experts said.
The solution, which aims to ensure supply through multiple sources to meet demand, is thought to include a long-term leasing mechanism, shared ownership and property tax.
The essence of such a solution is to ensure that houses are used as primary residences rather than for speculative profit, according to Qin Hong, head of a research center under the Ministry of Housing and Urban-Rural Development.
During the annual Central Economic Work Conference, which concluded in December, long-term leasing was first officially proposed and regarded as a cornerstone in developing the rental housing market.
“The conference set the tone for the housing market in 2018 and for years to come,” said Hu Jinghui, vice-president of real estate agency 5i5j.com. “Implementation of the long-term solution will be speeded up, with more resources allocated to the rental market.”
The size of China’s leasing market, now 1.38 trillion yuan ($212 billion), is expected to reach nearly 2 trillion yuan by 2020, according to Huang Yu, vice-dean of Beijing-based property research institute China Index Academy.
“There are bigger opportunities in leasing this year,” said Huang. “This is partly due to the government’s supportive policies. Skyrocketing home prices in some metropolitan areas also mean residents postpone their first home purchase, creating stronger demand for rentals.”
Following the central government-led campaign to encourage more people to rent rather than buy, around a third of the top 30 property companies have entered the long-term leasing market. Some financial institutions and internet companies also have jumped on the bandwagon.
Country Garden, a major listed developer, said in December that it plans to build 1 million apartments for long-term leasing in the next three years.
Hu Feng, senior director of Cushman & Wakefield (North China), a provider of real estate services, said business prospects for long-term leasing are promising.
“With favorable policies, a growing number of business opportunities are popping up, such as real estate investment trusts,” said Hu.
Construction of homes with the ownership shared between the government and individual buyers will also be promoted to meet middle-income housing demand, Qin said. In the next five years, Beijing will offer land to build 250,000 shared ownership homes.
Hu at 5i5j.com said work on a property tax has been speeded up to curb speculative home purchases.