Housing has become pivotal in attracting and retaining talent in first-tier cities. Although numerous cities are actively promoting the provision of talent housing in China, little is known about the talent’s evaluations of talent housing policies or the effect on their urban settlement intention. This paper aims to investigate whether talent housing alleviates the housing difficulties of talent and its role in retaining talent. A questionnaire was conducted face-to-face in talent housing in Shanghai. Binary logistic regression was employed to analyse the factors significantly contributing to the settlement intentions of the talent. Talent housing was confirmed to alleviate the talent’s housing pressures and further increase their urban settlement intention. The local hukou was determined to be crucial in accelerating the willingness of talent to settle in Shanghai. However, housing affordability (including school district housing) may jeopardise such positive effects. It is crucial to provide more choices of talent housing and increase the coverage of good-quality educational resources. In the long run, more talent can be attracted and retained in the locality under a broader coverage of the talent housing scheme.