Tenants on move as rents soar in Beijing

"The agencies should not pay a price higher than the market level to landlords in order to gain more apartments for stock, which will drive up rents. Any realtor will be fined or closed if found to have used unreasonably high sums to gain apartment contracts," the commission said.

On Aug 19, a group of Beijing real estate agencies held a meeting with the heads of 10 major long-term apartment rental companies. The companies promised not to drive up rents, and to release more than 120,000 apartments from stock to the market for tenants.

Ziroom promised to provide 80,000 apartments from its stock to the market－the highest number.

Supply and demand

Even though the agencies put more apartments on the market after these meetings with the authorities－which proved that they had been holding apartments in stock－they said publicly that the major reason for the rent rises is a supply shortage, rather than the influence of speculation.

According to a report from Real-Data, a research institution owned by the Lianjia Group, the Beijing municipal government has been tearing down illegal buildings and co-renting apartments to prevent safety risks in recent months, which has led to a reduction in supply.

Tenants who used to favor low-end apartments, which can be shared by several people, had to turn to higher-level ones, which cost more.

In the past year, Beijing has torn down 59.85 million square meters of illegal construction and plans to demolish another 40 million sq m this year.

On the other hand, the city's overall saleable area of apartments in the past year was 8.75 million sq m and its affordable housing area was 2.67 million sq m. Beijing's total floor space for residential buildings is 882 million sq m.

Yang Xianling, chief economist and head of RealData, said the imbalance between supply, which has been falling, and the growing demand－especially from new graduates in summer－was the major reason for the rent increases.

According to the institution, the average rent in Beijing in the first seven months of this year grew by 10.7 percent year-on-year and monthly increases during this time were 2.6 percent on average.