When stability becomes a liability

A logical choice to make

Industry experts said the number of people who think like Shu and Zhong are growing in numbers, seeing how rental rates have grown at a slower pace than new home prices.

According to data by real estate services provider Savills, the average price of new homes in Shanghai surged from 10,336 yuan per sq m in 2007 to 32,151 yuan per sq m in 2015. In contrast, rent for medium- to high-end properties rose from 173.2 yuan per sq m to 181.3 yuan per sq m during the same period. James Macdonald, head of Savills China Research, said that the annual rent of a two-bedroom apartment in Shanghai is only between 1.5 and 2 percent of the property's value.

Macdonald also added that young professionals working in major cities like Shanghai usually prefer to rent a home in the more central areas of the city so as to reduce their traveling time to work. Having to buy a home would usually mean having to settle for a property far from the city center where prices are lower.

Zhang Xue, who started renting homes ever since she graduated from Shanghai International Studies University a few years ago, is one such individual who would rather rent a home close to the workplace and cut down her traveling time.

"My current salary allows me to buy a small apartment in suburban Jiading district, which costs about 1 million yuan. But the sacrifice is too huge - I will have to spend at least three hours a day commuting," said Zhang.

"Besides, buying the ideal home is an unreachable goal. When I earned 5,000 yuan a month, the home price was too high. Now, even though I'm earning 20,000 yuan a month, the home price is still equally prohibitive."

For Sun Yongshi, a senior student of Communication University of China in Beijing, the decision to rent instead of buy is down to environmental conditions.

"Considering Beijing's air condition, I prefer to buy a home in Zhejiang province or my hometown in Jiangsu province as an investment. But my preferred work location is Beijing," said Sun, a part-time trainee at Bank of Tangshan who is currently renting an apartment in the Chinese capital.

Cheng Sun, a Shanghai native who is now living in a 130 sq m apartment that he leases for 15,000 yuan a month, said that rented homes afford a flexibility for people like him who travel a lot for work.

"I will likely to be traveling between many Chinese cities and even countries in the future, so living in a rented home makes more sense. As long as the lease is long enough, I do not see any difference between a leased home and one that I own," said Cheng.

Rental demand set to grow

A recent survey conducted by Chinese online classifieds 58.com showed that a significant population of young people in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen live in leased homes. According to Beijing News, 41.69 percent of the married couples polled rent a home, while 60.26 percent of those currently renting a home said they will continue to do so in the next three to five years.

Looking ahead, Macdonald said that the rising mobility of white collars in large Chinese cities will result in more people living in leased homes, similar to the situation in other global cities around the world.

Chen Sheng, president of the China Real Estate Data Academy, added that the government should consider implementing policies that provide tenants and home owners with equal benefits in terms of education and social welfare.

He Wei and Pan Yixuan in Shanghai contributed to the story.

wang_ying@chinadaily.com.cn