Leasing prices of homes for Shanghai expats are expected to rise this year because the vacancy rate is low even though companies are trimming their housing allowances, a local real estate agency predicted.

Expat home leases may average an 8 percent rise in price this year while an average vacancy rate is about 4 percent, according to Knight Frank's newly released Shanghai Expatriate Housing Market Insights.

"The city's economic growth and its status as China's financial capital continue to attract overseas professionals," said Regina Yang, head of research & consultancy at Knight Frank Shanghai. "The inflow of expatriates into Shanghai is expected to remain strong, fueling demand for expat housing, especially in Pudong."

Of all the expatriate communities across the city, downtown Huangpu, Xuhui and Jing'an districts and the Lujiazui area of Pudong have higher rents, averaging 189 yuan (US$30) square meter/month, Knight Frank research showed.

In the next two years, rentals are expected to increase further, mainly because of tightened credit and restrictions on home purchases. The policy has led more and more Chinese landlords to charge 10,000 to 25,000 yuan per month for high-end properties, Knight Frank predicted.