(Yicai) July 13 -- The downturn in China’s housing rental market is moderating, with rents still below year-earlier levels overall in the first half, while first-tier cities, especially Beijing, Shanghai, and Shenzhen, returned to growth.

The average rent for a home across 50 major cities fell by a cumulative nearly 0.6 percent in the six months ended June 30, versus a more than 0.8 percent drop a year ago, according to data from the China Index Academy, an industry think tank. Last month, the average was CNY33.97 (USD5) per square meter, down 2.8 percent from the same period of last year but up 0.1 percent on May.

Eight of the 50 cities recorded cumulative rent gains in the period, compared with only one a year earlier, indicating a clear market recovery trend. Of the 42 cities that scored cumulative decreases, 15 were under 1 percent, 20 were between 1 percent and 2 percent, and seven were in excess of 2 percent.

Rents in key cities generally continued to edge lower during the first half, the CIA noted. However, after several years of sustained price corrections, the scope for further declines is steadily diminishing, it added.

Strong underlying demand, together with the "anchoring" effect of government-subsidized affordable rentals for lower-income groups, has reduced price volatility in many cities, according to the CIA, and as a result, fluctuations have become noticeably more moderate across a number of regional markets.

The clearest signs of recovery have emerged in first-tier cities. The cumulative average rent in these markets rose 0.6 percent during the six months, ending a two-year downturn. On a monthly basis, Beijing, Shanghai, and Shenzhen each recorded gains for four straight months, underscoring the strength of the rebound. Guangzhou was the only first-tier city to post a cumulative decline in rents during the first half, although the decrease remained below 1 percent.

By comparison, rental markets in lower-tier cities remained under pressure. Average residential rents in second-tier cities fell by a cumulative 1.2 percent during the period, while rents in third- and fourth-tier cities declined 0.8 percent.

The home rental market is entering a new phase of development, shifting away from rapid expansion toward service quality, operational efficiency, and regulatory compliance, industry insiders said, adding that a series of measures introduced by central and local authorities are helping to ease housing costs for key groups, including new urban residents and young professionals.

Editors: Tang Shihua, Futura Costaglione