A few months after her wedding this year, Lilian Li moved from Chongqing to a business district apartment in Beijing.

Most Chinese newlyweds would buy a house and see this as a must after marriage. Parents of the new bride normally took this as a prerequisite before approving a marriage. 

But against all odds, Li and her husband rent a two-bedroom apartment in the capital city for 13,000 yuan or a little over $1,800 per month.

Li and her family would need a down payment of more than 5 million yuan to buy an identical apartment, or almost $720,000. This is equal to 30 years of rent.

28 years old Li told Financial Times about her unusual decision: 

“My husband and I had a deep conversation about the life we want, and we reached an agreement not to buy.” 

“We don’t want to owe our parents a massive down payment or to fall heavily into debt.”

Indeed, most young Chinese make the same choice, which could hurt the country’s housing market. Young Chinese are the main buyers of houses in the city. 

China’s rising house prices make it hard to buy a home there. Prices rise faster than rents. Zhuge Zhaofang is a real estate data provider. He says that in June, the price of a home to the monthly rent ratio was above 600 in key cities. In 2007, the ratio was only 400 or less.

According to a Chinese Academy of Social Sciences study, a government think tank, if this ratio goes over 200, it could lead to a potential housing price bubble.

According to real estate provider Creprice.cn, an average apartment in Beijing costs up to 69,000 per square meter or over $920 per square foot. 

Qiqi Zhang is a Shanghai-based managing director at the U.S. private equity group Warburg Pincus. Since 2013, the firm has invested in rental property in China. He said that high house prices in big cities still put “a lot of pressure” on young people. 

In big cities, first-time buyers often get help from their families or take out loans. But Evergrande, which went bankrupt last year due to a liquidity issue, has sparked a tacit crisis in the property market with ongoing effects until now. Many buyers are now left with homes that were not finished. Because of this, people like Li are hesitant to buy a home, something commonly seen as a safe and profitable investment option.

Victoria Zhan, a young banker who put off buying a house in the suburbs of Shanghai this year, said: 

“With no wealth-creation effect, what’s the point of buying properties like crazy? Why not just rent?”

As a result, China International Capital Corporation predicted that by 2035, there would be 200 million to 300 million more Chinese renters.

Back to Li. She and her husband said that they would keep renting in Beijing. The couple would buy an apartment in Chongqing when they get older and ready to retire.

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