CITIC Securities: Mortgage-to-Rent Parity Signal Emerges, Bullish on Developers and Leading Brokerage Firms
nashnova research
CITIC Securities says monthly mortgage payments on some resale homes in tier-one cities have dropped below rents, calling it a key signal that home prices are bottoming, and recommends developers and leading property brokerages.
What does "mortgage below rent" actually mean?
"Mortgage below rent" — monthly loan repayments falling below the rent for an equivalent unit — is the core indicator CITIC uses to call a price floor.
This means → when renting costs more than buying, tenants have a rational incentive to switch to ownership, creating a self-reinforcing demand floor under prices.
In plain terms = if your rent cheque is bigger than a mortgage payment, buying makes more sense — once enough people act on that, prices struggle to fall further.
The report cites China's 2020 census: 21.1% of urban households were renters, a sizable pool of potential converters.
Where do tier-one cities stand right now?
Average rents in Beijing, Shanghai, and Shenzhen have risen month-on-month for five consecutive months; rental yields sit at 2.15%, 2.11%, 2.21%, and 1.97% for Beijing, Shanghai, Guangzhou, and Shenzhen respectively.
After the September 29 policy — a one-percentage-point interest subsidy for first-home buyers of small and mid-sized units — the mortgage-to-rent ratio on a benchmark RMB 1.5 million home with a RMB 1 million loan fell from 106% to 90%.
This means → with the subsidy, the big four cities are approaching system-wide mortgage-below-rent; select projects have already crossed the line, mirroring Hong Kong's position in late 2024.
What does Hong Kong's precedent tell us?
CITIC benchmarks against Hong Kong: the city reached localised mortgage-below-rent in late 2024, and prices began recovering from March 2025.
This reflects a pattern: once mortgage-below-rent spreads from pockets to the broader market, the probability of price stabilisation rises sharply.
In plain terms = Hong Kong's sequence was: mortgage cheaper than rent → tenants enter the market → prices bottom and rebound. CITIC argues tier-one mainland cities are now on the same track.
Is transaction data backing this up?
In September 2026, resale volumes across 72 sample cities rose 18.9% year-on-year, up from 11.7% in June, 10.6% in July, and 14.1% in August.
On September 30 and October 1 — immediately after the new policy — daily transactions jumped 31.7% and 37.4% year-on-year respectively.
This means → demand-side policy is converting the theoretical advantage of mortgage-below-rent into actual transaction volume.
Where are the risks?
Some smaller cities have already reached mortgage-below-rent, but rents there are still falling — not necessarily a sign of a price floor.
The subsidy has scope limits; properties outside its coverage remain some distance from the threshold.
Developers still face near-term earnings pressure. This reflects the fact that whether mortgage-below-rent can spread from pockets to the whole market is the critical checkpoint for confirming this cycle's price bottom.
市场有风险，内容仅供研究参考，不构成投资建议。