Summary of Key Points
The national rental market is still in the process of adjustment, but rents in first-tier cities have developed their own independent trend: rents have been rising month-on-month for three consecutive months, and year-on-year growth has turned positive in the first five months. Beijing, Shanghai, and Shenzhen are leading the increase, while Guangzhou has shown a slight decline. The reasons behind this include increased demand from job seekers, a shift in young people's rental attitudes from a temporary solution to a long-term lifestyle, and an increase in institutionalized rental properties. In contrast, rents in second- and third-tier cities are still falling, though the rate of decline has slowed down. The market is entering the second half of its adjustment phase, and the upcoming graduation season will likely lead to structural changes—demand will rise in core cities, while it will be harder for rents to increase in smaller cities.
Why Have Rents in First-Tier Cities Been Rising Against the Trend?
From March to May this year, rents in first-tier cities have risen month-on-month for three consecutive months, with a 0.16% increase in May and a year-on-year growth of 0.21%. Beijing, Shanghai, and Shenzhen are at the forefront of this trend, with Shanghai experiencing the most significant rise (over 0.5% both in April and May). Rents in the main urban areas and industrial zones of Beijing and Shenzhen have increased moderately, while rents in Guangzhou have decreased slightly.
The key factors behind the rise in first-tier cities are their large population and high job demand:
- Strong industrial support: These cities have robust industries (such as internet in Beijing, finance in Shanghai, and technology in Shenzhen), attracting many young people seeking employment and thus increasing rental demand.
- Seasonal demand: The return to work after the Spring Festival and the approaching graduation season have led to a surge in rental demand.
- Higher expectations from landlords: For example, in a residential area of Fangshan, Beijing, the price of a similar property increased from 2,500 to 2,600 yuan within a week, indicating that landlords believe the market is recovering and are unwilling to lower prices further.
Young People's Rental Attitudes: From Temporary to Long-Term
In the past, renting was seen as a temporary solution while saving for buying a house. However, many people now regard renting as a long-term lifestyle:
- Changing attitudes: 80% of tenants are willing to rent for 5-6 years or even longer, and nearly 40% do not consider buying a house in the near future.
- Diversified tenant demographics: For the first time, tenants over 30 years old account for more than 50% of the market (according to 2025 data), and 70% rent with family members (partners, children, parents), indicating that renting is no longer exclusive to young people. The demand for family-friendly rental options is on the rise.
- The logic behind this: Many people prefer not to be tied down by mortgage payments and use long-term rentals or strategies like "renting out their current home to afford a better one" to improve their living standards.
The Arrival of Institutionalized Rental Properties
Previously, the rental market was dominated by individual landlords, resulting in lower-quality properties. In 40 key cities nationwide, 39.2% of properties were over 20 years old and difficult to rent out. Now, institutional players are entering the market:
- State-owned enterprises are taking the lead: For example, Beijing Capital Group has secured 60 billion yuan in special loans for long-term rental projects, aiming to manage 30,000 units within two years.
- Expansion of institutional operations: In May 2026, the top 30 long-term rental apartment companies operated 1.457 million units, with local state-owned enterprises accounting for 28%, and this number is still growing.
- Benefits of institutionalized rentals: These properties offer better standards (uniform decoration, quality services), helping to revitalize old buildings and meet the needs of family-oriented tenants.
National Market Divergence
While the overall rental market has not fully recovered, there are signs of stabilization in first-tier cities. In May, average rents in 50 cities fell by 0.11% month-on-month, with second- and third-tier cities experiencing larger declines (2.7% and 2%, respectively). Only 11 cities saw rent increases, while 39 saw declines (Beihai had the largest drop at 1.07%).
There are also positive developments:
- The rate of decline has slowed: The year-on-year decrease is 0.21 percentage points lower than in April, indicating that the market is less likely to continue to fall.
- Future structural changes: With the graduation season (12.7 million graduates) approaching, demand for rentals will surge in core first- and second-tier cities (such as Hangzhou and Chengdu) due to job opportunities. In smaller cities, however, limited industrial development and fewer young people mean that rents are unlikely to rise significantly, but the decline will also be slower.
- Conclusion: The market is entering a phase of stabilization, with less volatility in rent prices. First-tier cities, with their strong fundamentals, will stabilize first.
Overall
The recovery of rental markets in first-tier cities is due to a combination of industrial growth, population growth, and changing attitudes. Although the national market is still adjusting, it is nearing a bottom. In the future, the divergence between core cities and smaller cities will become more pronounced. For tenants, rent costs in core cities are likely to rise gradually, while they will remain relatively lower in smaller cities. For landlords, properties in first-tier cities are more resilient to price drops, while those in smaller cities may need to be discounted to find tenants. The increase in institutionalized rental options will improve the rental experience, making it easier to find homes that feel like a home.