According to the latest report from the China Index Academy, the third quarter of 2025 exhibited a continued slight adjustment in the average rent levels of major cities in China's housing rental market, marked by significant progress in the legal and regulatory framework of the industry. Looking ahead to the fourth quarter, the housing rental sector is expected to enter its traditional off-peak season. This, combined with stable demand and ongoing increases in the supply of rental housing, will lead to continued adjustments in the average residential rent in key cities. However, with policy support, the industry is poised for increased professionalism, standardization, and a notable enhancement in quality supply, paving the way for a new phase of high-quality development.
The report notes that the mid-year graduation season had a diminishing effect on rental prices, resulting in a continued slight downward trend overall in the average rents in major cities during the third quarter, particularly resilient in first-tier cities. In terms of policy, the enactment of the Housing Rental Regulations, first of its kind at a national level, marks a breakthrough for the legal environment governing the rental sector; local governments are reinforcing policy implementation with a focus on housing supply and regulatory systems.
In the third quarter, the rental price index for 50 cities showed an aggregate decrease of 0.61%, with month-on-month rental declines becoming more pronounced. In July, rental prices slowed their decline largely due to the graduation season, seeing a month-on-month drop of only 0.07%. However, after August, as the effects of the graduation season faded, rental demand slumped, leading to a wider month-on-month decline. In September, some core cities witnessed significant rent drops due to the conclusion of peak rental periods for school-age families, resulting in an average rent of 34.74 yuan per square meter per month, a decline of 0.39% month-on-month and 3.76% year-on-year.
From a city-specific perspective, rents across many cities fell in the third quarter, although the decline in first-tier cities showed signs of stabilizing, with 30 of the 50 cities reporting rents between 20-30 yuan per square meter per month. As of September 2025, rents in Beijing, Shanghai, and Shenzhen remained over 80 yuan per square meter per month, while those in Hangzhou, Guangzhou, Sanya, and Xiamen ranged between 40-50 yuan per square meter per month.
With 46 of the 50 monitored cities reporting rent declines, only four cities—including Xining and Urumqi—experienced negligible increases in rent during the third quarter. Among the cities with decreases, Sanya recorded the largest drop at 1.91%.
In terms of investment return, the rent-to-price ratio in key cities showed a slight upward trend, indicating improved returns for quality assets. As of September 2025, the average rent-to-price ratio across 50 cities was 2.21%, a 0.23 percentage point increase from the low in early 2023, reflecting the industry's commercial sustainability.
The third quarter also saw the implementation of the Housing Rental Regulations, marking significant progress in legal frameworks and investment strategies within the industry. Local governments actively supported new policies aimed at enhancing the quality and availability of rental housing, with a concerted effort to orchestrate supply and demand in the local rental markets.
Overall, the second quarter performance of public rental housing REITs remained strong, with a general improvement in occupancy rates for market-driven projects. Looking to the fourth quarter, the housing rental industry is transitioning into its traditional lull, likely resulting in a modest decline in demand, even as supply continues to increase due to ongoing project completions. This future landscape indicates a trend towards increased professionalism and standardization within the sector, emphasizing the need for quality in rental community offerings.