Introduction
Hello everyone. Today, let's talk about a hot topic in the current property market. Not only are housing prices falling, but rent is also at a low ebb. I'm Douzi. Today, we'll delve into the crisis in the rental market in China, explore the reasons behind it, and discuss its impact on our lives.
Data Reveals the Grim Situation of the Rental Market
According to the latest data from the Linping Living Big Data Research Institute, in May 2025, the average rent in 40 large and medium-sized cities across the country was 34.37 yuan per square meter. It decreased by 0.32 percentage points month-on-month and 1.14 percentage points year-on-year. What's more astonishing is that rent has been falling month-on-month for 9 consecutive months and year-on-year for 19 months. This has pushed the rent level in 2025 to the lowest point since 2019. Clearly, the problems in the property market are no longer limited to falling housing prices; the rental market is also in deep trouble.
The Unusual Situation in the Peak Rental Season
May to September each year is usually the peak season for the rental market. Graduates leave campus and start looking for jobs, and rental demand usually surges during this period. However, the data in May this year shows that rent is still declining. Notably, the number of college graduates in China reached a record high of 12.22 million in 2025, an increase of 430,000 compared to last year. Despite this, rent prices have not stopped falling, indicating that the supply-demand relationship in the rental market has undergone profound changes. Market demand is weak, while the supply of housing is constantly increasing.
The Plight of Second - hand Landlords and Market Blow - ups
The downturn in the rental market is not only reflected in the decline in rent prices but also in the plight of second - hand landlords. According to Kelei's data, in the first quarter of 2025, the number of second - hand landlord blow - up incidents in first-tier cities increased by 170 percentage points year-on-year, involving more than 50,000 housing units and affecting more than 100,000 tenants. In addition, according to incomplete statistics, in just the five cities of Beijing, Shanghai, Guangzhou, Shenzhen, and Hangzhou, in the past year, tenant disputes caused by second - hand landlords running away or defaulting involved more than 130,000 people and an amount of more than 200 million yuan.
Reasons for the Blow - up of Second - hand Landlords
The blow - up of second - hand landlords is largely due to changes in the market environment. In the past, the model of second - hand landlords buying houses at high prices and sub - leasing them at low prices to earn the price difference was quite common during the period of rising housing prices. However, now that rent is continuously falling and the cost of buying houses remains high, many second - hand landlords are unable to make ends meet and even have to run away. This not only causes economic losses to tenants but also further exacerbates the chaos in the rental market.
Why is the Rental Market So Difficult?
Demand - side: Economic Pressure and Population Changes
On the demand side, the economic situation in recent years has been less than optimistic. Overall consumer demand has declined, and tenants' incomes have generally decreased. Naturally, their ability to pay high rents has also decreased. Many people have to choose cheaper housing or simply move to areas with lower rents, which directly leads to the suppression of rent prices.
In addition, although the number of college graduates is increasing year by year, the growth of the permanent population in many cities has slowed down significantly. The decrease in population inflow means that the potential demand in the rental market is also shrinking. Especially in some second - and third-tier cities, the phenomenon of population outflow is becoming more and more obvious, and rental demand is further declining, making it difficult for rent prices to stabilize.
Supply - side: Excess Housing and the Impact of Affordable Housing
On the supply side, the rapid increase in rental housing is another major factor driving down rent. In recent years, the property market transaction has been sluggish, the number of second-hand housing listings has surged, and the transaction cycle has been continuously extended. Many landlords find it difficult to sell their houses and then choose to rent them out or rent them while selling. This has led to a substantial increase in the number of houses available for rent in the market. The situation of oversupply forces landlords to continuously lower rents to attract tenants.
More importantly, the rapid increase in affordable rental housing has had a huge impact on the market. Take Chongqing as an example. As of May 2025, the local area has raised 292,000 sets of affordable rental housing. These affordable housing are usually rented at a rent lower than the market price. For example, in Guangzhou and Shenzhen, the rent of some affordable housing is only 60% of the rent of surrounding commercial housing. This low-cost competition not only increases market supply but also directly lowers the overall rent level.
The Far-reaching Impact of Rent Decline
The continuous decline of rent may reflect more serious problems than the decline of housing prices. The fluctuation of housing prices is often affected by factors such as policy regulation and credit support, while rent is a more direct barometer, reflecting the income level and economic expectations of local residents. The continuous decline of rent for years means that residents' income expectations are deteriorating, and phenomena such as salary cuts and layoffs may become more common.
Weakening of Real Estate Investment Value
In the upward cycle of real estate, the rapid rise of housing prices made people pay more attention to asset appreciation, and the rent - to - price ratio was often ignored. However, in the current context of falling housing prices, the continuous decline of rent further weakens the investment value of real estate. Some houses may even become negative assets, that is, the rent income cannot cover the holding cost, which is undoubtedly a big blow to those landlords who rely on rent income.
Reflection of the Downward Cycle of the Real Estate Market
At a deeper level, the core logic of the real estate market lies in debt transfer. As long as residents are willing to take on more debt, housing prices can continue to rise. However, the current deterioration of income expectations makes many people unable to afford to buy houses through leverage, and the driving force for housing price increases is weakening. The decline of rent further confirms this trend, highlighting the severity of the downward cycle of the real estate market.
The Storm in Shanghai's Rental Market
Take Shanghai as an example. The local rental market is experiencing a storm. Second - hand landlords who used to earn the price difference by buying houses at high prices and sub - leasing them are now withdrawing from the market in batches. According to industry insiders, about 70% of second - hand landlords in Shanghai have run away or stopped operating, and the remaining ones are also selling off their houses in large quantities.
Causes of the Storm in Shanghai's Rental Market
The sharp drop in rent prices is the primary cause of this phenomenon. In some core areas of Shanghai, such as Huangpu and Jing'an, the rent of traditional old and small houses has generally been discounted by 20%. A house that could be rented for 5,000 yuan last year may only need 4,000 yuan to rent this year. Tenants' bargaining power is also increasing, and they often cut prices by hundreds of yuan when moving out. Many second - hand landlords can't even recover the decoration costs of the houses they bought at high prices, and they have to pay property management fees every month.
At the same time, affordable rental housing in Shanghai is springing up like mushrooms after rain. In 2024, Shanghai added more than 30,000 sets of affordable housing. These houses are usually equipped with fine decoration, elevators and other facilities, and the rent is much lower than the market price, attracting a large number of young tenants. This has a dimensionality - reducing impact on the traditional rental market and further compresses the living space of second - hand landlords.
In addition, the consumption concepts of the tenant group are also changing. Young people are becoming more and more shrewd. With the help of rental avoidance guides shared on platforms such as Xiaohongshu, they have learned how to identify problem houses, avoid water and electricity fee traps, and even record the whole process when moving out to prevent disputes. This awakening makes the traditional routines of second - hand landlords difficult to work. Even the giants in the rental industry have not been spared. It is reported that long-term rental apartment platforms such as Ziru have大规模退出高价房源 since the second half of last year, even at the cost of paying liquidated damages, and have turned to抢夺低价房源. This shows that even the leading enterprises with big data advantages have lost confidence in the second - hand landlord model.
The Truth Behind the Rent - to - Price Ratio
The continuous decline of rent has also made people start to re - examine the rent - to - price ratio. In the past, when housing prices rose rapidly, the rent - to - price ratio was generally low. In big cities, it was usually about 1 percentage point, and in small cities, it was about 2 percentage points. In contrast, the normal rent - to - price ratio in the international market is usually about 7 - 8 percentage points. Such a low rent - to - price ratio actually reflects the high bubble of domestic housing prices.
Advice for Homebuyers
Now, with the decline of both housing prices and rent, the profitability of real estate is facing severe challenges. For those friends who are considering buying a house, my advice is to wait a little longer. At least, wait until the rent price in your city starts to stabilize or even rise slightly before considering buying. Because the stability of rent often means that the local economy and income expectations are improving, which may be a signal of the recovery of the property market.
Conclusion: Opportunities and Challenges in the Rental Market
In general, the current困境 of the rental market is both a challenge and an opportunity. For tenants, the decline of rent and the increase of affordable housing undoubtedly reduce the cost of living, forming a rare buyer's market. But for landlords and second - hand landlords, the imbalance between market supply and demand and the decline of rent bring huge pressure.
The Root Causes and Future Trends
Ultimately, the changes in the rental market reflect deeper economic and population trends. The decrease in population inflow, the deterioration of income expectations, and the increase in affordable housing supply jointly shape the current pattern of the rental market. In the future, as long as the supply of affordable housing continues to expand and the economy has not yet recovered significantly, the downward trend of rent prices may continue.
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