In recent years, China’s younger generation has exhibited a significant shift in attitudes toward homeownership. Unlike previous generations who viewed owning a home as a hallmark of financial stability, many young Chinese now prioritize quality of life, mobility, and financial flexibility over the long-term commitment of purchasing property. This change is notably reflected in their approach to housing, with a growing preference for renting rather than buying. Factors contributing to this trend include the high cost of real estate in major cities, the desire for career mobility, and a broader redefinition of wealth and success. As a result, renting has become a more attractive option, aligning with their aspirations for a balanced and fulfilling life.
As China continues to evolve, so too does the nature of its housing market. The latest report on rental housing development in China’s major cities reveals critical trends reshaping urban living in 2024. A significant proportion of urban dwellers now prefer renting over buying, with the rental population reaching almost 200 million nationwide. In China’s top-tier cities, about 47.3% of residents are renters, signaling a substantial societal shift towards rental as a mainstream living arrangement.
Historically, homeownership has been seen as a hallmark of stability in China. However, rapid urbanization, economic considerations, and changes in individual preferences have driven a rise in the rental market. This shift is particularly pronounced among young people and new city residents, many of whom prioritize mobility and affordability over the long-term financial commitment of buying a home.
The Chinese government has been pivotal in fostering this growth by promoting a dual emphasis on renting and buying. Since 2017, policies have aimed to ensure equal rights for renters and homeowners, which is part of a broader effort to stabilize urban housing conditions. Notable initiatives include large-scale pilot projects in cities like Guangzhou, Shenzhen, and Nanjing, and financial support from the central government for rental market development in key cities such as Beijing, Shanghai, and Changchun.
In 2021, the State Council emphasized the development of guaranteed rental housing to address the pressing housing needs of young professionals and new city dwellers. The government’s 20th National Congress further reinforced these policies, highlighting the goal of establishing a balanced, sustainable housing system. The latest push includes the introduction of tax incentives for rental housing providers and streamlined regulations to ensure renters receive fair treatment comparable to homeowners.
Affordability has improved across major Chinese cities, with the rent-to-income ratio in 2023 averaging 19.3%, down from previous years. For first-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen, the ratio was still high at around 34%, but it marked a noticeable decrease compared to 2022. This trend suggests that rental housing is becoming increasingly accessible, especially as median rental prices have dropped for three consecutive years. For instance, the median monthly rent in major cities fell to approximately 2,201 RMB ($300 USD), providing some relief to residents in bustling urban areas.
Another indicator of market health is the average time taken for rentals to be secured. In 2023, the average listing period for rental properties was 38 days, while the time taken for renters to find a suitable property was around 5 days, highlighting a renter-driven market. The smaller units, such as one-bedroom apartments, rented out the fastest, reflecting the high demand among young professionals and smaller households.
Beyond affordability, the quality of rental housing has also seen significant improvement. The report highlights that the average living space per person has increased, with the average for dispersed private rental housing reaching 32.9 square meters per capita. Such a trend points to better living conditions and a gradual shift towards more spacious rental options, catering especially to families and those looking for comfort within rental accommodations.
Furthermore, rental properties are increasingly well-connected to urban infrastructure. The average coverage of public transport, such as metro stations within 800 meters of rental units, was 60% for institutionally managed rentals and 37% for public rental housing, both well above the urban average of 25.8%. Such developments underscore the growing convenience offered by rental housing, making it a more attractive option for commuters and young urban professionals.
Institutionalized rental housing—managed by companies rather than individual landlords—has seen rapid expansion. The number of institutionally managed rental units in key cities reached approximately 1.48 million in 2023, with over half of these concentrated in first-tier cities. This growth is driven by both increased government incentives and the rise of rental-specific developers such as Vanke and Longfor, who are known for their large-scale, professionally managed rental communities. These units often come with amenities like gyms, co-working spaces, and social areas, which are designed to attract young professionals looking for more than just a place to sleep.
Another positive development for the sustainability of the rental market is the improving rent-to-sale price ratio. In 2023, the ratio averaged 2.34% across major cities, surpassing the five-year fixed deposit interest rates offered by major banks. This indicates that rental yields are becoming more attractive to investors, encouraging the development of more rental properties and ensuring long-term growth in the sector.
An interesting aspect of the rental market highlighted in the report is the role of “urban villages” (城中村) in mega-cities like Shenzhen. Urban villages are typically areas with densely packed, informal housing that provides affordable living options for migrant workers and lower-income residents. In Shenzhen alone, there are over 1,665 urban villages housing approximately 10 million people—almost half of the city’s population. These areas offer a unique mix of affordability and proximity to workplaces, making them an essential part of the urban rental ecosystem.
In recent years, the government has taken a more active role in upgrading urban villages, aiming to transform them into more livable spaces while preserving their affordability. The redevelopment projects often involve collaborations between private developers and local authorities, which focus on improving infrastructure, amenities, and overall living conditions without significantly raising rents. Such projects, as seen in Shenzhen’s Yuanfen Community and Shuiwei Village, provide a blueprint for integrating low-cost housing into the broader urban development agenda.
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