The report shows that the most difficult city to buy a house in mainland China is Shenzhen, where an average family needs to skip 27 years of work to afford a house.
Shell Research Institute released the “2021 New Tier 1 City Living Report” at the 2021 New Tier 1 City Summit on May 27th, reporting on the living affordability of 114 cities, according to China Business News 27th.
In terms of housing affordability, Shell Research Institute compiled the average price of new and second-hand transactions and per capita disposable income in 2021 based on public data to calculate the house price to income ratio in each major city.
The 10 cities with the highest house price to income ratio are Shenzhen, Beijing, Shanghai, Xiamen, Sanya, Hangzhou, Guangzhou, Tianjin, Fuzhou and Zhuhai. Among the four first-tier cities, Shenzhen, Beijing, Shanghai and Guangzhou, Shenzhen tops the list with 27.09, while Beijing and Shanghai both exceed 20. Among the four first-tier cities, Guangzhou has the least pressure to buy a house, with a house price to income ratio of 14.64.
Shenzhen not only has high housing prices, but also faces high upward pressure on housing prices. According to the National Bureau of Statistics of the Communist Party of China, in February this year, Shenzhen’s second-hand houses rose by 16% year-on-year, ranking first on the mainland.
Explaining the reasons for the high housing prices in Shenzhen, the report said that on the one hand, there is a strong demand. According to the latest published population data, Shenzhen’s population growth over the past ten years reached 7,136,500, leading all major cities in terms of growth, with a ten-year increase of 68.47%.
On the other hand, with such a large inflow of talent and population, Shenzhen’s housing supply is relatively limited. According to the annual data of major cities published by the National Bureau of Statistics, from 2002 to 2019, the total area of residential commercial properties sold in Shenzhen was 98,998,300 square meters, ranking 26th among 35 major cities. If calculated at 80 square meters per suite, there are only about 1.24 million units. Among them, the sales area in 2019 is only 6,384,200 square meters, only one-eighth of Chongqing.
Overall, the burden of living in first-tier cities is significantly higher than other city levels, with the arithmetic average of the burden of living index in first-tier cities being about 89.1, new first-tier cities about 65.2, second-tier cities about 63.5, third-tier cities about 59.3 and fourth-tier cities about 55.1, with the higher the city level, the higher the burden of living accordingly.
In addition, it is not easy to buy a house in big cities, and the pressure to rent is also high. Shell Research Institute research shows that the generally acceptable rent-to-income ratio for tenants is below 30%, i.e. the rent cannot exceed 30% of the monthly household income. However, the rent-to-income ratio in Sanya, Shanghai, Shenzhen and Beijing is higher than 30 percent.
The report said that the housing problem of new citizen groups based on migrant workers, newly graduated college students and mobile population is still prominent in large cities with high population inflow.
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