China has undergone rapid urbanization and economic growth over the past few decades. This has led to a massive migration of people from rural areas to cities in search of jobs and better opportunities. With this urban migration, more and more people in China now live in rented apartments rather than owning their home. So paying rent has become an inevitable part of life for most people living in cities across China.
Do people in China pay rent?
Yes, the majority of people living in cities and towns in China pay rent for their housing. Home ownership levels in China are still relatively low compared to developed countries. According to data from Statista, the home ownership rate in China was only 70.4% in 2015. This is far below countries like the USA where the home ownership rate was over 63%.
The high cost of buying property in Chinese cities is the main factor forcing many people to rent rather than buy a home. For example, in top-tier cities like Beijing and Shanghai, the average apartment can cost over 20 times the average annual income or more. Down payments of 30-40% are often required. It is very difficult for even middle-class households to afford these prices.
What is the average rent in China?
Rents in Chinese cities have rapidly increased alongside rising property prices. According to Numbeo, the average monthly rent for a one-bedroom apartment in city centers around China are:
| City | Average Rent |
| Beijing | $955 |
| Shanghai | $929 |
| Shenzhen | $826 |
| Guangzhou | $681 |
| Chengdu | $389 |
As seen, rents in top-tier cities like Beijing and Shanghai are close to $1000 per month on average for a small apartment. Second-tier cities such as Chengdu are more affordable, but rents are rising fast.
Rents Rising Faster than Incomes
The problem for many households is that rents have been rising much faster than incomes in recent years. From 2011 to 2015, average rents in Beijing increased by over 50% while average disposable incomes only rose by around 31%. This disparity between rent and income growth makes housing increasingly unaffordable.
Affordability Issues
High rents are a major burden on household budgets in Chinese cities. People spend an average of 30-50% of their monthly income on rent according to salary survey site Zhaopin. Those on lower incomes spend an even greater proportion.
Spending such large portions of income on housing costs leaves little left for other living expenses. It forces many people to find ways to cut costs in areas like food, transport, healthcare, or education.
Despite the affordability issues, cheaper rental options in cities are very limited. There is a severe shortage of affordable housing in places like Beijing and Shanghai. Cheap rental apartments tend to be poorly maintained or located far from jobs.
Subletting Common
Due to the shortage of affordable housing, subletting rental units has become very common in China’s cities. Young people will often cram into a small apartment, with several people sharing one bedroom through subletting arrangements.
While this allows individuals to cut their housing costs, it often means living in very cramped quarters with little privacy. Entire families sometimes end up subletting just a single room from a tenant.
Local governments are attempting to crack down on illegal subletting. But enforcement is difficult, and subletting continues to be widespread.
Migrant Workers
Migrant workers from rural areas are an especially vulnerable group when it comes to housing costs in cities. Their low incomes make formal rental apartments unaffordable.
Many end up renting informal housing on the peri-urban fringes of cities. These include unfinished buildings, temporary structures, and dilapidated housing. Often lacking proper kitchens, heating, sanitation and overcrowded, such informal housing keeps costs down but conditions can be extremely poor.
Ensuring migrant workers have access to affordable and humane rental housing remains a major policy issue. Government-subsidized affordable housing projects are attempting to address the problem. But demand still outpaces supply.
Government Rental Housing
In response to housing affordability issues, the Chinese government has ambitious plans to expand rental housing. Under the country’s latest 5-Year Plan, the goal is to have a total of 6 million government subsidized rental units available nationally by 2025.
Key programs to expand affordable rental housing include:
Public Rental Housing
These units are owned by local governments and rented at below-market rates to qualifying lower-income households. Rent is set at 70% or less of market prices.
Government-Subsidized Housing
This housing receives capital subsidies from the government but is built and operated by commercial developers. Rents are required to be at least 10% below market prices.
Shared Ownership Housing
This scheme enables households to purchase a share of a property, co-owned with a government entity. The buyer pays a deposit of typically 20-30% of the home’s value, while the government owns the remaining share. This substantially reduces purchase costs.
By increasing affordable rental housing, the government hopes to ease some of the housing affordability pressures facing both urban residents and rural migrant workers.
Housing as an Investment
Many Chinese view owning a home as the ultimate symbol of economic success. Housing is seen as a vital investment for the future. Parents will often buy homes for their children to help secure their financial future.
With limited alternative investment options, property has absorbed a huge share of household wealth in China. But is also fuels speculative investment and rapidly rising prices.
To discourage speculation, government restrictions make it very difficult to buy a second home in many cities. And mortgage lending regulations have been tightened. But a cultural obsession with home ownership makes curbing property investment very difficult.
Rental Reforms
China’s government has introduced a series of reforms in recent years aimed at improving rental conditions and tenants’ rights:
Longer Minimum Lease Terms
The minimum lease term was increased from 6 months to 1 year. This provides tenants with more housing stability.
Rent Control
Cities can impose rent control policies to limit excessive rent increases. However, uptake has been limited to date.
Better Tenancy Protections
Tenants’ legal protections against unfair evictions or landlords not returning deposits have been strengthened. But more work is needed to enforce the revised regulations.
Rental Subsidies
Some cities have introduced rental assistance payments for lower-income households who spend excessive amounts on rent. But such subsidies are still very limited.
The Future of Renting
The Chinese government has an explicit policy goal of increasing the proportion of households living in rental housing in the long-term. Officials want to encourage more professional and better-regulated rental markets to mature.
If home ownership rates in China begin shifting down towards more “normal” levels of say 60-70%, this would help cool speculative demand in the property market. And support greater labor mobility between regions.
But cultural biases toward home ownership will be difficult to change. Persistently high housing prices and rising rents also undermine efforts to make renting a more accessible and desirable option for China’s urban residents.
Conclusion
In conclusion, the vast majority of people living in cities and towns across China pay monthly rent for their accommodation. High property prices make home ownership unaffordable for many households. Average rents have increased rapidly, now taking up 30% or more of incomes for most families. Rental affordability issues are especially acute for migrant workers from rural areas who often live in poor quality informal housing. The government is attempting to expand affordable rental housing. But cultural preferences for home ownership plus market forces continue to push rents higher. Meaning that paying rent looks set to remain a financial reality for most of China’s urban population into the future.