APPD Market Report Article

Shanghai

May 26, 2024

Daniel Yao, Head of Research, China

-6.7%

RMB 179

Rents
Falling

Shanghai ramps up policy support to spur homebuying demand

  • Shanghai relaxed home purchase restrictions in January, allowing single non-local residents who have paid income tax or social insurance for five years to purchase one house beyond the city’s outer ring (except Chongming District). Minimum mortgage rates for first- and second-home purchases were also cut to 3.85% and 4.15%, respectively, in line with the quarter’s 25 bps cut to the five-year LPR.
  • Cautious homebuying sentiment and a fall in new supply led Shanghai’s primary mass-market home sales to decline 30.3% q-o-q and 45.4% y-o-y to 1.4 million sqm in the quarter. Meanwhile, High-end sales totalled 1,041 units (up 26.8% q-o-q), driven by solid upgrading demand and increased new High-end supply in 1Q24.

Five High-end projects launch for sale in 1Q24

  • New supply dropped 48.5% q-o-q and 6.1% y-o-y to 1.7 million sqm in the quarter. The decline was driven by seasonal effects stemming from the Chinese New Year (CNY) holiday. 
  • Five High-end projects in core locations were launched for sale in 1Q24, representing a total of 1,214 units. Average prices of these new projects ranged between RMB 134,000 per sqm and RMB 172,000 per sqm.

High-end secondary prices continue to decline

  • Average primary prices rose 0.7% q-o-q to RMB 138,500 per sqm in 1Q24 amid looser price caps. Meanwhile, abundant High-end primary supply in the quarter weighed on the recovery of secondary home sales momentum, leading more secondary homeowners to offer price concessions. As a result, the average secondary prices further declined by 3.2% q-o-q to RMB 152,800 per sqm. 
  • Despite a moderate recovery in leasing demand for High-end apartments in the quarter, the large number of High-end residential projects available for lease continued to put downward pressure on rent growth. As such, average rents for High-end apartments recorded RMB 178.8 per sqm in 1Q24, down 1.7% q-o-q and 6.7% y-o-y. 

Outlook: Demand-side policy adjustments to gather pace

  • We expect more demand-side measures to be rolled out over the year, which should bolster homebuyer confidence and facilitate a steady recovery in both primary and secondary home sales.
  • High-end primary prices are expected to continue to rise amid loosening price caps. Meanwhile, High-end secondary prices are likely to decline further in the coming quarters. The pace of secondary price declines may slow on the back of looser credit and housing policy regulations.  

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

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