As Chinese property prices keep rising, the thought of owning a property has long become a pipe dream for many.
Yet rent inflation follows property price inflation, and now even renting is becoming out of reach for many.
The housing price-to-income ratio for urban residents is expected to reach 8.3 and the figure for migrant workers will be as high as 22.08, according to the 2010 Blue Book of China’s Economy released by the Chinese Academy of Social Sciences at the end of 2009.
That means millions are forced to rent, the rising costs of which can prove frustrating.
In Beijing, the average price of renting an apartment reached 2,889 yuan ($432) in August, more than 3 per cent higher than in July and a 15-per cent year-on-year increase, according to figures released by the real estate agency, 5i5j.
Many tenants find that rents rise dramatically when they attempt to renew their leases, a result of high demand and insufficient supply.
Migrant workers are especially feeling the squeeze, and it means that one of two things has to happen — rents and property prices need to fall or salaries need to rise. We have a feeling that the later is more likely given the inflationary pressures in China and all the incentives towards supporting property prices on the mainland. Thus high property prices and rents could be a sign of upcoming wage inflation rather than a sign of a property price collapse.