According to a study by a professional real estate research institute, the average rental return in 50 large and medium-sized cities in China is less than 2%, and the average sale to rent ratio is 50.9 years, which means that it takes 50.9 years for Chinese residents to recover the cost of buying a house with rent. Xiamen has the largest sales-to-rent ratio, at 81.3 years.
On December 17, Zhuge Finder Data Research Center released the “2020 National Key 50 Cities Rent-to-Sale Ratio Survey and Research Report” (report), which shows that the rent-to-sale ratio of 50 key cities in 2020 is 1:611, far below the international reasonable rent-to-sale ratio level, of which only one city, Yinchuan, has a rent-to-sale ratio of 1:289 within a reasonable range.
The rent-sales ratio refers to the ratio between the monthly rent per square meter of usable area and the house price per square meter of building area. The rent-sales ratio used internationally to measure the good operation of a regional property is generally defined as 1:300~1:200.
The report shows that the top ten cities with high rent-to-sale ratios are concentrated in the second-tier and third- and fourth-tier cities in the northwest and northeast, of which Yinchuan ranks first with a rent-to-sale ratio of 1:289, the only city in the reasonable rent-to-sale ratio range, followed by Urumqi and Zhanjiang with rent-to-sale ratios of 1:364 and 1:376 respectively, ranking second and third.
Data show that Yinchuan 2020 rent level is 25.94 yuan / ㎡ / month, the level of house prices is 7487 yuan / ㎡, house prices in the 50 key cities at the bottom level; Urumqi 2020 rent level is 23.93 yuan / ㎡ / month, house prices are 8712 yuan / ㎡, house prices are also in the 50 key cities in the top three levels of low house prices.
Coastal areas with high levels of economic development have relatively low rent-to-sale ratios. The report shows that the top ten cities with low rent-to-sale ratio are concentrated in the second-tier and third- and fourth-tier cities in the Bohai Rim, Yangtze River Delta and Pearl River Delta economic circle, among which Xiamen becomes the city with the lowest rent-to-sale ratio at 1:975, followed by Sanya and Suzhou with rent-to-sale ratios of 1:864 and 1:786 respectively.
Data show that the average rent level in Xiamen in 2020 is 47.51 yuan/㎡/month, and the house price has reached the level of 46,335 yuan/㎡, becoming the fourth most expensive city after Shenzhen, Shanghai and Beijing; Sanya’s rent level in 2020 is 42.43 yuan/㎡/month, and the house price is 36,660 yuan/㎡, ranking eighth in the house price level.
Compared with the rent-sales ratio, the sales-rent ratio is a more intuitive reflection of the number of years to recover costs. Generally speaking, the higher the sale to rent ratio, the longer the number of years to recover the capital through renting.
The report shows that the average sale to rent ratio in China’s top 50 cities is 50.9 years, which means that it takes 50.9 years for Chinese residents to recover the cost of buying a home with rent.
Among the 50 cities, Xiamen has the largest sales-to-rent ratio, at 81.3 years. This means that it takes 81.3 years for a homeowner in Xiamen to recover the cost of buying a home through rent, provided that housing prices and rents remain unchanged; followed by Sanya with a 72-year sales-to-rent ratio, Suzhou with a 65.5-year sales-to-rent ratio, and Qingdao with a 64.4-year sales-to-rent ratio, and only one first-tier city, Shenzhen, with a 63-year sales-to-rent ratio among the top 10 cities.
By region, the Strait Economic Zone ranks first with an average sales-to-rent ratio of 63 years, followed by the Bohai Economic Zone with a sales-to-rent ratio of 54.3 years, mainly driven by Qingdao, Shijiazhuang, Jinan, Beijing and other cities with high sales-to-rent ratios; the Yangtze River Delta Economic Zone has a sales-to-rent ratio of 54.1 years, with Suzhou, Ningbo and Changzhou in the top three, all of which are higher than the sales-to-rent ratio of the first-tier city of Shanghai.
From the perspective of rental return, the rental return of large and medium-sized cities in China is much lower than that of other countries, and the Bohai Rim and Yangtze River Delta have become areas of low return concentration.
The rental return rate refers to the ratio of the rent obtained from monthly rentals to the cost of housing. Some typical countries around the world, such as the United States, Japan and other rental return rate are above the 5% level. Among them, New York in the U.S. ranks first among the world’s major cities with a rental return of 6.25%, followed by Tokyo in Japan with a rental return of 5.51%.
The report shows that the average rental return in China’s large and medium-sized cities is less than 2%, and the rental returns in the 50 selected large and medium-sized cities are all below the 5% level. Among the key cities in the world, Beijing is at the bottom with a rental return of 1.88%.
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