Home sales momentum moderates

• Shanghai’s primary mass-market home sales increased 6.1% q-o-q to around 2.7 million sqm, thanks to a rebound in new supply in the quarter. Nevertheless, 2Q23 saw Shanghai’s homebuying sentiment moderate since much pent-up demand had already been released in 1Q23, and sales performance further diverged across new projects. 
• Among the quarter’s new launches, projects with larger unit sizes and prime locations were well received by buyers who wanted to upgrade. High-end sales momentum was resilient overall, with 1,164 high-end units registered as sold, up 65.6% from 1Q23.

High-end market sees six new projects launch

• The pace of new project launches picked up over the quarter, leading to around 2.8 million sqm of new supply being launched, up 53.8% q-o-q and 159.1% y-o-y. 
• The quarter saw six new high-end projects launch 1,389 units for pre-sale, up 564.6% compared to the preceding quarter. 

Primary prices continue edging up

• Primary prices edged up a further 0.6% q-o-q to RMB 132,252 per sqm, a result of relatively looser price caps. In the secondary market, however, economic uncertainty led more buyers to adopt a wait-and-see attitude, resulting in fewer enquiries and impacting individual owners’ confidence. As a result, secondary prices fell 0.9% q-o-q. 
• High-end leasing activity slowed in the quarter as renters’ expectations softened amid economic uncertainty. Average high-end rents slid 1.0% q-o-q to RMB 182.2 per sqm, per month. 

Outlook: Sales momentum to remain moderate in 2H23

• We expect buying sentiment to remain moderate amid continued economic uncertainty and tight local housing policies. That said, high-end projects with good value should continue to be favoured by buyers looking to upgrade.
• Primary prices will likely continue to climb modestly in the near term as price caps remain loose. On the other hand, the fall in home transactions in the secondary market is expected to continue to weigh on the recovery of secondary prices.