Given the profound changes in the supply and demand dynamics in the real estate market, the residential real estate inventory in China is already very large, the central bank said in a report on the implementation of its monetary policy.

On the demand side, market institutions expect China’s population in need of rental housing to exceed 200 million and the market potential is relatively large, the PBoC said, adding that demand is rising among key groups, including young college graduates entering the job market and low-income people, which has increased in recent years.

On the supply side, the economic sustainability of the residential rental industry has improved in recent years through the recovery of the rent-to-sales ratio and the reduction of financing and operating costs.

As a result, more and more housing rental companies have entered the market and their large-scale and intensive operations are expected to lead to high-quality and more stable rental housing services, the PBoC said.

According to the PBoC, the central bank has increased financial support for government-subsidized housing by establishing a lending facility for such projects.

By the end of June, China’s financial institutions had issued rental housing loans totaling 24.7 billion yuan (about 3.46 billion U.S. dollars), with the remaining amount of government-subsidized housing loans amounting to 12.1 billion yuan.

In the next step, China will improve the financial support system for housing rentals and channel more social capital investment into the sector, the central bank said.

It further stated that a sustainable business model would be developed to support the reduction of the existing commercial housing stock and to drive the transformation and development of the country’s real estate industry.