Concrete Analysis | China’s land system breakthrough is allowing rural land for rental housing
Developing rural land into rental housing promotes a more balanced system between leasing and sales, stabilise the market and dampen abnormal expectation of an endless price rise in the first and second-tier cities
China’s recent launch of the pilot scheme that allows the development of collectively owned land into residential properties for leasing will have a profound impact not only on the residential leasing market, but also on the land market and the housing system.
Announced by the Ministry of Land and Resources and Ministry of Housing and Urban-Rural Development last month, it also confirmed the first batch of trial sites in 13 cities – Beijing, Shanghai, Shenyang, Nanjing, Hangzhou, Hefei, Xiamen, Zhengzhou, Wuhan, Guangzhou, Foshan, Zhaoqing and Chengdu – to build rental housing on collectively owned land.
The scheme which represents a breakthrough of the land supply system, is firstly, expected to boost the supply of rental housing and help meet the demand of the low-income groups.
With strong economic fundamentals, full-blown municipal planning and higher income levels, popular first and second-tier cities have seen a continuous net population inflow that has prompted a new and robust demand for homes and a supply shortage in the real estate market. Amid the rebound of the property industry, housing prices have rapidly escalatedin these cities since 2016, which in turn have pushed rents up.
Triggered by the rise in housing prices and rents, migrant workers from some large and medium-sized cities have returned to their townships, and some technological and innovative enterprises have also relocated from the eastern coastal areas to the middle and the western regions in the country.