(Yicai Global) July 24 -- The municipal government of China's southern city of Guangzhou has proposed 16 measures to reform renting, including granting access to local schools for the children of renters who fulfill the required criteria, a new government program paper states.
Last year's Central Economic Working Conference, China's most important governmental economic conference, called for proposals to normalize development of the lease market, accelerate related legislation, push institutionalization and scale the development of leasing firms, and set up a housing system of simultaneous renting and purchasing in order to meet multi-level demands.
The Ministry of Housing and Urban-Rural Development and eight other relevant ministries teamed up recently to release a policy paper to accelerate the rental market in cities that possessed a net population inflow and large demand for housing.
The policies show that government departments are no longer focused on promoting housing purchases rather than rentals, said the new president of one of China's biggest property developers China Vanke Co. [SHE:000002]. In the future, demand for housing holds strong potential while the lease market, elderly care real estate and education property are also promising sectors, he predicts.
The price-to-income ratio for renting is extremely high in Beijing (58 percent), Shenzhen (54 percent), Sanya (48 percent) and Shanghai (48 percent), a study by the E-House China Research and Development Institute shows.
Rent undoubtedly represents the largest financial burden for the working class in China's major cities. One way to control the rental prices would be to supply houses for rental.
First, it would be necessary to stimulate the supply of houses for potential individual renters, usually individuals and institutions. In developed or developing countries, individual owners are often the major force in the lease market.
Secondly, it is important to strengthen institutionalized and fixed property for leasing, nurture growth, attract real estate agents to the sector, and add new housing supply to the lease market.