APPD Market Report Article

Shanghai

May 31, 2022

5.0%

RMB 172

Growth
Slowing

Sales activities are disrupted by the local outbreak

  • Sales activities remained solid in January, but were affected by the following Spring Festival holiday in February and the local rebound of the pandemic in March. With a high sales volume achieved in January, Shanghai’s primary housing market saw sales volume edge up 5.1% q-o-q to about 2.7 million sqm.
  • High-end sales slightly declined by 3.3% q-o-q to 1,069 units in 1Q22. That said, overall sentiment in the high-end segment remained solid as projects that launched in the first quarter received large numbers of buyers.

Six high-end projects launch

  • Following a supply wave in the previous quarter, 1Q22 saw mass market new supply moderate by 10.7% q-o-q to around 2.7 million sqm, with the majority of new launches taking place in January prior to the Spring Festival holiday.
  • In the high-end segment, six projects launched a total of 1,482 units, with average prices ranging from RMB 115,000 to RMB 132,000 per sqm. Among the new projects, four were located in the North Bund, an emerging business and high-end residential area that has been attracting an abundance of talent.

Secondary prices stop declining amid a loosening of credit

  • Under continued price cap regulations, high-end primary prices stayed flat at about RMB 126,600 per sqm. Secondary prices stopped declining and edged up 0.4% q-o-q to RMB 105,000 per sqm, as upgraders were encouraged by easing monetary policies and a looser credit environment.
  • Leasing activities slowed during Chinese New Year and were further disrupted by repeated local outbreaks in March. The resulting moderation in demand led average rents to remain flat at RMB 171.5 per sqm in 1Q22.

Outlook: Some sales planned for 1H22 may slip into 2H22

  • Shanghai’s housing policy stance is expected to remain tight. Looser credit is expected to benefit both first-time homebuyers and upgraders while investment demand will continue to face curbs. We expect stable sales momentum in the primary market over 2022, although recent outbreaks mean some sales activities planned for 1H22 may slip into 2H22.
  • After the local outbreak is contained, we expect secondary sales activities and prices to continue recovering over 2022 amid the looser credit environment. However, performance in secondary projects may further diverge as homebuyers pursue residential compounds with good quality and strong property management, which has proven important during the recent outbreak.

Note: Shanghai Residential refers to Shanghai's high-end residential market.

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