Recently, housing rental prices seems to have been significantly increased in many major cities in China. Especially in Shanghai, the rental market, which had been unchanged for more than two months due to lockdown, suddenly exploded as soon as the city was unsealed. In this article, we will provide a summary of some of the most recent rental trends in China and try to understand the main reasons behind the increase.
A. Rental Prices in China’s Major Cities
In June, the average rental prices in China’s 40 major cities rose 2.1% in June from a month earlier, compared with May’s 0.78% increase.
The average rental prices started with 2 months of continuous rising prices in 2022, which soon took a big turn and started to drop since March, due to the new wave of COVID-19 pandemic national-wide, as well as the challenging employment environment and rising unemployment rate.
The prices are seen rising again in June, due to the graduation season and the improvement of the employment environment. According to the data monitored by the data Research Center of Zhuge House Hunter, the average monthly rent of June 2022 in major cities was 35.64 RMB per square meter, a rise of 0.37% month on month, and 0.01% compared to June 2021.
Although the rental price trends differ, depending on the size of the city, e.g. in June 2022, the average rent shows an increasing trend in tier 1 and tier 2 cities and at the same time shows a decreasing trend in tier 3 and tier 4 cities.
For June 2022, data shows that the average monthly rent in tier 1 cities was 87.92 RMB per sqm, an increase of 1.45% month on month and 2.76% compared to June 2021. The average monthly rent in tier 2 cities was only 31.69 RMB per sqm, a slight increase of 0.03% from May 2022 and a drop of 1.25% from June 2021. The average monthly rent in tier 3 and tier 4 cities was 24.24 RMB per sqm, a slight dip of 0.02% from May and an increase by 0.69% from last June.
The reason for such a big gap between tier 1 cities and others, is that a large number of newly graduated students entered into both the employment and rental markets. According to the data released by the Education Department, the total number of new graduates in 2022 will reach 10.76 million, 1.67 million more than last year. Both the total number and the increase rate are new historical records, with such an increase naturally leading to high demand and rental prices rising.
In addition, according to the 2022 Graduation Season Research and Analysis Report issued by 58 City and Ganji Hire Direct, two of the most prominent websites in the real estate sector (among other functions that they provide), indicated that due to many factors, including more job opportunities, stronger economy and better location, tier 1 cities are still the first choice for the majority of the new graduates. The rental prices in these cities are therefore increasing more significantly than other cities. In particular, the rental prices in Beijing, Shanghai, Guangzhou and Shenzhen had all risen in June 2022 by more than 0.7% compared to May 2022.
B. Rental Prices Trend in Shanghai
On June 1st, Shanghai was released from lockdown as scheduled, and the rental market, which had shown no activity for two months, suddenly exploded. According to the rent report of key cities in May, issued by 58 Tongcheng and anjuke, data shows that the rent fever in multiple districts in Shanghai has increased by more than 60% month on month. The backlog of rental demand during the pandemic period as well as the rental demand in the graduation season detonated the rental market in Shanghai. Many landlords reported that houses were rented out in less than an hour, with the rental market in Shanghai rebounding significantly.
In Shanghai, which has been seriously affected by the pandemic, the population mobility had been weakened due to prevention and control management, which has greatly affected the rental market this year. In the short term, cross regional population mobility and the arrival of the graduation season have since had a positive impact on the rental market. According to the data of anjuke Real Estate Research Institute, Shanghai’s rental fever has generally increased month on month. Pudong, Minhang, Baoshan, Fengxian, Xuhui and Hongkou have all increased by more than 60% month on month. The number of new houses in Chongming district has increased by more than three times month on month.
In June 2022, the average monthly rent in Shanghai had reached to 99.81 RMB per sqm, a rise of 2.17% higher than May, and 0.49% more than June 2021, which also marks the most expensive rent in China. In July, it is believed that the prices will still go up as the high demand remains.
If we take the statistics of week 27 (June 26 to July 3) issued by Data Research Center of Zhuge House Hunter as reference, the key findings are as follows:
- The rental prices in general still rose by 2.28% compared to the previous week
The rental prices in general are still going up: according to the data monitored by Data Research Center of Zhuge House Hunter, the average monthly rent in Shanghai has reached 103.59 RMB per sqm, while in June it was still 99.81RMB per sqm.
- The average rental price for a 3-bedroom apartment dropped by 0.12% while 1-bedrooms increased by 0.65%.
- In week 27, rental prices for all types of apartments all went up. The average monthly rent for 1-bedroom apartments was 5040.21 RMB, an increase of 0.65%; an average of 7585.11 RMB for 2-bedroom apartments, 11745.71 RMB for 3-bedroom apartments and 18810.25 RMB for 4-bedroom apartments.
- The rent in Luwan area is 3.5 times the rent in Jinshan
The gap of the rental prices in different districts is quite significant. Luwan ranks 1st among all districts in Shanghai, with the average monthly rental of 159.73 RMB, followed by Huangpu, of which the rent is 153.41 RMB, while in Jinshan, the number is only 45.59 RMB. The prices in the most expensive area, Luwan is already 3.5 times the rent in Jinshan. In particular, the rental price in Xintianjin has reached 193.71 RMB per month per sqm, ranking 1st in terms of the rental price in mainland China.
| Rank | District | Business Area | Rent（RMB/㎡/m） | Trend (vs wk26) | |
| 1 | Luwan | Xintiandi | 193.71 | 0.7% | |
| 2 | Xuhui | Jianguo West Rd | 178.06 | 0.46% | |
| 3 | Luwan | Huaihai Mid Rd | 177.06 | 0.58% | |
| 4 | Jing’An | Nanjing West Rd | 175.64 | -0.09% | |
| 5 | Xuhui | Hengshan Rd | 173.62 | 0.81% | |
| 6 | Changning | Zhenning Rd | 171.81 | 0.35% | |
| 7 | Jing’An | Jing’An Temple | 170.11 | 1.51% | |
| 8 | Xuhui | Xuhuibinjiang | 165.78 | -0.04% | |
| 9 | Huangpu | Huangpubinjiang | 164.26 | 1.05% | |
| 10 | Jing’An | Jiangning Rd | 157.39 | 0.55% | |
| 11 | Changning | Gubei | 157.25 | 0.15% | |
| 12 | Luwan | Shibobinjiang | 157.11 | 0.06% | |
| 13 | Jing’An | Caojiadu | 152.41 | 0.42% | |
| 14 | Huangpu | Laoximen | 149.91 | 1.36% | |
| 15 | Huangpu | People Square | 148.07 | 0.39% | |
| 16 | Pudong | Lujiazui | 147.75 | 0.05% | |
| 17 | Luwan | Wuliqiao | 146.87 | 1.7% | |
| 18 | Luwan | Dapuqiao | 146.2 | 0.02% | |
| 19 | Huangpu | Dongjiadu | 145.98 | 1.26% | |
| 20 | Xuhui | Xietu Rd | 143.41 | 0.43% |
Data source：Data Research Institute Zhuge House Hunter
C. Conclusion
In conclusion, the rental prices in major cities, especially in Shanghai have seen a rising trend since June 2022. The key conclusions are as follows:
- In June 2022, the average monthly rental price of the major cities in China was 35.64 RMB per sqm, a rise of 0.37% from the previous month, and 0.01% from last June. The main drive for such an increase was high demand, caused by new graduates entering the market.
- In June 2022, the average monthly rent in tier 1 cities was 87.92 RMB per sqm, an increased of 1.45% compared to May and 2.76% more than June 2021; the average monthly rent in tier 2 cities was 31.69 RMB per sqm, slight rise of 0.03% compared to May, but a drop of 1.25% compared to the same time last year.
- Since June 2022, both Shanghai’s rental market and the rental prices have generally increased month on month, due to the cross regional population mobility, as well as the arrival of the graduation season. The average monthly rent in Shanghai had reached 103.59 RMB per sqm as of week 27, of 2022, and the Xintiandi area remains to be the most expensive place to live in, ranking 1st among all areas in Shanghai, with rent of RMB193.71 per sqm per month.
- As graduation season continues, we believe that rental prices in major cities, especially in Shanghai, are expected to continue to rise in the following months until September, if not earlier.
