Rental market hasn't come down - yet??

by **migao** » Wed Oct 19, 2011 10:40 pm

Can you guys share what's your feeling/first hand touch about the rental market - is it true that it went up a lot (over 10%...?) in the first half of this year, and hasn't come down at all yet in the second half?

Or has it actually dropped a lot after the summer, as most of us would like to believe?

At least the apartment sales transactions just hit their 6-year low.

by **tylerdurden** » Wed Oct 19, 2011 10:53 pm

Can't think of any reason why it would go down further. Rents are already ridiculously low compared to purchase price or "valuation". True, there are many untenanted apartments, but these are mainly on the outskirts and have not even been fitted out, ie, they are uninhabitable and are being held in the (mostly forlorn) hope of a capital gain.

What's more likely is that real estate values will drop or at least stagnate, and rents will slowly creep up as owners start to realise there is a steady demand for good rental properties and that money can actually be made.

by **yunnanexpat** » Wed Oct 19, 2011 11:25 pm

^^^This. Varying for local markets, but this is likely in most of China.

A 100+ m hi-rise nearby Tier 4 nowheresville was empty 2 years ago. Last weekend I checked, many many apartments occupied. Owners or renters I don't know, but those empty cities are going to be filled.

by **migao** » Wed Oct 19, 2011 11:37 pm

The official "Shanghai Rental Index" (上海房屋租赁指数) indicates +5.5% annual increase from September last year (1244) to September this year (1313). But of course, it may be just lies, damn lies and Chinese statistics...

by **johnny_tropicana** » Thu Oct 20, 2011 3:20 am

I thought it was an inverse relationship: As the home market drops, the
rental market actually increases...(am I wrong?)

by **bleepingbleeper** » Thu Oct 20, 2011 4:01 pm

johnny_tropicana wrote:I thought it was an inverse relationship: As the home market drops, the
rental market actually increases...(am I wrong?)

^ i think that only works when most buyers are looking to purchase as a residence, not as an investment vehicle.

by **monalisalee** » Thu Oct 20, 2011 9:19 pm

From what I have seen, the recent changes to the rules regarding purchase of properties, has led to more properties being available for renting, as buyers are adopting a "wait and see" option.
But it seems rentals have not fallen, or gone up, but have levelled out for the time being.

by **migao** » Sat Oct 22, 2011 10:43 pm

bleepingbleeper wrote:
johnny_tropicana wrote:I thought it was an inverse relationship: As the home market drops, the
rental market actually increases...(am I wrong?)

^ i think that only works when most buyers are looking to purchase as a residence, not as an investment vehicle.

I agree. To me it would be logical if this property bubble started bursting, both selling prices and rents would come down.

by **monalisalee** » Sat Oct 22, 2011 10:59 pm

Ha Ha. It aint going to happen.
Wishfell thinking.

by **event** » Fri Nov 04, 2011 9:56 pm

It's just China, you never know whats going on, and even harder to make any predictions. Just have to live on, see what happens and try to adept

by **Logic** » Fri Nov 04, 2011 10:52 pm

tylerdurden wrote:Can't think of any reason why it would go down further. Rents are already ridiculously low compared to purchase price or "valuation". True, there are many untenanted apartments, but these are mainly on the outskirts and have not even been fitted out, ie, they are uninhabitable and are being held in the (mostly forlorn) hope of a capital gain.

What's more likely is that real estate values will drop or at least stagnate, and rents will slowly creep up as owners start to realise there is a steady demand for good rental properties and that money can actually be made.

^
This.

There is a total disconnect in Shanghai currently between property value and rental value, it makes little sense at all. Even so with property sales stagnating/falling and first time buyers waiting to see what happens before purchasing, it would be expected that rental values rise in line with increased demand.

by **Andreas** » Fri Nov 04, 2011 10:55 pm

The 'market' works different here. In this situation, with a slight fall in real estate prices, rentals are actually going up. Same a few years ago when a lot of landlords, like anybody else, lost money in the local casino they call stock market here.

by **Logic** » Fri Nov 04, 2011 11:14 pm

^
That's not different, that's normal/expected

by **Andreas** » Fri Nov 04, 2011 11:24 pm

Logic wrote:^
That's not different, that's normal/expected

Yes, in China it's to be expected

Rental market hasn't come down - yet??

Rental market hasn't come down - yet??

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