Rentals Are Way Forward as Buying Houses Is No Longer Profitable, CCB Chairman Says
Chen Juan
/SOURCE : yicai
Rentals Are Way Forward as Buying Houses Is No Longer Profitable, CCB Chairman Says


(Yicai Global) Dec. 25 -- China needs to improve its property rental market to combat the fact that buying a house is no longer profitable, according to the chief of one of China's big four state-owned banks.

Enhancing the rental sector is an effective way to solve problems in the real estate market, China Construction Bank Chairman Tian Guoli said at a forum held by Peking University's Guanghua School of Management this weekend. It would also mean more liquidity for individuals who do not stump up large wads of cash as a deposit on a house.

"I've been active in the financial sector my entire life and can say that buying a house is not profitable right now," Tian said. "It doesn't make sense to buy when properties already cost so much."

Real estate makes up about 60 percent to 70 percent of Chinese residents' assets, and outstanding mortgages in China tallied CNY38 trillion (USD5.5 trillion) over the third quarter, making up around 28 percent of all credit, he added, saying that it is continuing to take up a larger portion.

The vast amount of cash being loaned out for properties has been sparking recent debate over whether or not it could lead to systemic risks for the market, and Tian believes the government needs to step up to resolve the issue.

"The 19th National Congress of the Communist Party of China's report has set a direction for the housing system reform that involves both buying and renting," he said. "Some new problems exposed in the rental market recently have proved that its cultivation and standardized development, and the involvement of large state-owned financial enterprises, are necessary."

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Keywords: China Construction Bank , Tian Guoli