(Yicai Global) July 8 -- The apartment rental markets in China’s first-tier cities have had a bit of a boost from the college graduation season, but are still insipid compared with a year ago, while the markets in third- and fourth-tier cities and counties remain lukewarm.

In China’s top 100 cities in the second quarter, rentals were up 1.3 percent on the first three months of the year, while the length of time from listing to renting out shrank, according to data from Beike Research Institute.

“Apartments along Beijing's eastern third ring road are in short supply right now, as there are fewer available for rent, while the number of people hoping to live in the area grows as new graduates enter the market,” said a sales manager at an outlet of Maitian Real Estate Brokerage in the area.

China will have about 10.7 million college graduates this year, an increase of 1.7 million on last year, topping the 10 million mark for the first time, according to education ministry figures.

The home rental picture is patchy. While big cities have hot spots, the market is not as buoyant as during the same period in previous years, Yicai Global found, with some landlords in first-tier cities even prepared to cut rents.

“The expectations of apartment owners in this area were weakened by the pandemic and other factors,” said an employee with 5I5J who works in Beijing's Haidian district, a hotbed for tech startups.

Monthly rents in the area were generally about CNY400 to CNY500 (USD60 to USD75) below a year ago, partly because of the hit the local economy took from the pandemic and partly due to the relocation of big companies.

Changed Times

“Since ByteDance's Beijing office moved to another district earlier this year, many of its staff followed and the number of empty apartments in this neighborhood has ballooned,” the 5I5J staffer said. “In previous years, there would be no apartments for rent here by mid-June. But not this year. There are still plenty available.”

Rents rose more gently in second-tier cities than in first-tier ones, and even fell. In key second-tier cities in east China such as Hangzhou, Ningbo, Hefei and Nanchang, there were owners in main areas who cut the rent to avoid having vacant properties on their hands. 

In smaller cities the market is less inspiring. “I’ve an apartment for rent,” said a landlord in the eastern port city of Ningbo. “Even though it’s near a metro station, the rent will likely be CNY500 to CNY600 lower than last year.”

Rental markets in third- and fourth-tier cities and small counties were even more depressed due to their lower appeal among university graduates. A senior real estate salesman in Anhui province's Lujiang county said the majority of his clients were mostly farmers coming to the township to find work.

“Graduation season has very little impact here, and the vacancy rate of local apartments is still rising,” he said. Industry data support his experience.

In first-tier cities, rents rose 1.5 percent in June from May to CNY87.92 (USD13) per square meter, according to data from a think tank of property search engine Zhuge. The increase was 2.8 percent from a year ago. Smaller cities lag behind. In big and mid-sized cities, rents climbed almost 0.4 percent in June from May. But the number was unchanged in a year-on-year comparison.

In second-tier cities, monthly rents averaged CNY31.69 per sqm, virtually the same as in May and down 1.3 percent from a year ago.

Editors: Tang Shihua, Emmi Laine, Xiao Yi