Amid the whirlwind of falling home prices and dwindling property sales, China has found a new way to cope with the real estate tragedy - short term rentals.
The Wall Street Journal is reporting that in a matter of months, several short term rental firms have sprung up in the world's second largest economy, to help property owners and developers make some money while the market is still in dire straits.
"Just like how carpooling is becoming more popular, people are becoming more comfortable with renting out their assets when no one is using them," Chen Chi, chief executive of website Xiaozhu.com - a rental website like AirBnB - told the publication.
The Journal asserts that this is just a recent development. Earlier, the Chinese home owners avoided renting or letting out their properties to tenants as they wanted to flip the unused, brand new homes for a higher price later.
But, considering the state of the Chinese housing market, they are now resorting to these short term rentals. According to EChinaCities.com, which cites data from the National Bureau of Statistics, rents in Chinese cities have been soaring for 42 straight months. Beijing and Shanghai are now the most expensive cities to rent in.
While, the rental segment is heating up, ownership is still low.
Home sales in China have been plunging to new lows every month. According to MarketWatch, sales fell 10.5 percent in the first seven months of 2014 - a 9.2 percent fall from a year earlier and an indicator of a weakening real estate market.
There was a time when high property prices and strict purchase regulations kept several homes empty. In fact, large developments remained unoccupied due to high price and restrictions. Last year, CBS' 60 Minutes explored the ghost cities of China - the abandoned, grim, civil constructions that stood unpopulated.
While some experts said that the abandonment was a phase and would pass soon, vacancies in China have remained high. The government is now doing its best to cut back on the restriction and control a hard crash the market could witness. And, industry players say that the efforts will work.
"The current biggest problem of China's property industry is that the housing inventories are too high. But the declines are still not very big. With more cities relaxing curbs and the economy stabilizing, the property market will gradually stabilize," Liu Li-Gang, chief economist at ANZ Bank in Hong Kong, told Bloomberg in a phone interview today last month.
