What happened after housing-rental apps raise rent prices in China?

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China’s major rental apps were questioned last week by an industry watchdog for allegedly raising rent. Later, 10 housing rental apps including Ziroom and Danke promised to halt raising rent prices and to made available an additional 12,000 apartments in the Beijing market.

The Beijing Real Estate Agents Association held a meeting on August 19 to address concerns about rising rental prices. Rental apps including Ziroom, Danke, and 5i5j-backed 1zu said that they will comply with official instructions.

Founded in 2011, Ziroom is now one of the largest housing rental platforms in China; it has served over one million tenants and currently manages over 400,000 apartments across China. In January, Ziroom raised USD 621 million (RMB 4 billion) in a Series-A funding round from Warburg Pincus, Sequoia Capital China, and Tencent. About a month ago, netizens found out that Ziroom and Danke acquired apartments at above-market price points in a competition then proceeded to rent them out at even higher prices. According to official data, Beijing’s housing price per square meter raised 19.2 percent comparing to 2005. In July, the average monthly rent in Beijing was estimated to be 91.5 yuan (USD13) per square meter, an increase of 2.2 percent compared with the previous month, leading rental agent 5i5j Real Estate’s  data research center reported.

Netizens on Zhihu, China’s Quora-like platform, strongly expressed concerns over soaring rental prices. They worry that the issue may widely affect young workers who cannot afford to buy homes in big cities where the current monthly costs of housing often take up over 50% of their monthly salary. This will cause a labor shortage in the labor market if workers are forced to leave the cities.

Other experts pointed out that the short supply of housing is a fundamental cause of soaring rental price in big cities. They call on the government to ensure an adequate supply in the rental markets, as well as introduce related policies to regulate the rental market. According to the 2018 Shanghai House Rental Industry Summit, the total Chinese housing rental market reached 1.38 trillion yuan in 2017 and is expected to grow to 2.9 trillion by 2025.

(Top photo from unsplash.com)

Yufan Zhou

Yufan writes for AllTechAsia. She is studying Asian Studies in the School of Social Sciences at Waseda University. She is a foodie and MUNer. She is also interested in public administration, environmental development, and new media.

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