Shanghai's Pre-owned Home Market Recovers; Expert Says 'Good Housing' Policy Reshapes Landscape

(CNA correspondent Liao Wenqi, Shanghai, 6th) Recent data from the Shanghai real estate market shows a recovery, particularly in the transaction volume of pre-owned homes. Real estate experts in Shanghai point out that this rebound is related to the 'Good Housing' policy promoted by China, which is reshaping the real estate market landscape, and the government's purchase of some pre-owned homes to stabilize the market.

According to a report by Chinese media outlet Yicai on the 1st, the Shanghai pre-owned home market has remained active since the beginning of this year. Transaction volumes reached 31,200 units in March, 28,700 units in April, and despite the impact of the May Day holiday, exceeded 28,000 units in May. In particular, May's data showed a 31% increase compared to the same period last year, marking the highest transaction scale for this period in six years. Excluding the impact of the Chinese New Year, the market has remained above the 20,000-unit boom-bust line for six consecutive months.

At the same time, market inventory continues to shrink. According to statistics from Anjuke Shanghai, as of May 31st, the number of pre-owned home listings in Shanghai was approximately 309,200, compared to 379,700 in the same period last year, a decrease of over 70,000 listings in one year.

The report notes that because the same property is often listed multiple times, the industry typically calculates using a one-third ratio. Using this method to estimate the actual number of listings, the number of genuinely available pre-owned homes in Shanghai was about 126,000 in the same period last year, but has now dropped to approximately 103,000, a decrease of about 18%.

Pre-owned home prices have also risen. Data from the National Bureau of Statistics of China shows that from February to April this year, the sales prices of pre-owned homes in Shanghai increased by 0.2%, 0.4%, and 0.7% month-on-month, respectively, with the rate of increase continuously expanding.

Regarding the recovery in Shanghai's real estate market data, Cai Weimin, former director of the Real Estate Operations Research Institute at the Fudan University Real Estate Research Center, told CNA on the 5th that this is driven by the 'Good Housing' policy.

He stated that the 'Good Housing' policy launched last year by China's Ministry of Housing and Urban-Rural Development 'will affect China's real estate market for 30 years,' and its significance is even greater than several previous housing reforms. 'The entire market has been split into two parts because of this single policy,' he said. After the policy was introduced, existing homes became relatively 'bad' houses, while newly built ones are 'good houses.'

Cai predicted that new homes will see 'high prices and low transaction volumes.' For example, in terms of usable floor area ratio, new homes might achieve 120%, while pre-owned homes might only have 75%, making it very reasonable for new homes to sell at higher prices. However, the problem is that many people cannot afford expensive new homes, so they will turn to buying pre-owned homes, which is leading to the current rebound in pre-owned home transaction volumes.

Furthermore, the recovery of Shanghai's pre-owned home market is also related to the Shanghai municipal government's purchase of pre-owned homes as 'affordable rental housing' (social housing).

Cai said that Shanghai home prices have already fallen by 30% to 35%. Although it is difficult for the government to boost prices, further declines would have a 'fatal' effect on the market. Therefore, what the government is doing is 'stabilizing.' 'You think there's still a lot of inventory in the market, right? The government will buy it up for you,' he explained.

He analyzed that as pre-owned homes are gradually sold, it will create a certain check on new listings. 'Many people think, let me wait a bit, I don't need to list now, because listing now would just lead to a race to the bottom,' he said.

Cai gave an example, noting that last year in Shanghai, the number of listings rose rapidly, and listing prices fell quickly. Now, both listing prices and the number of listings are starting to decrease. 'Listing prices are still falling, but the rate of decline is not as large as before,' he said. When the number of pre-owned home listings decreases and prices are still at a low level, many people will consider making a purchase. (Editor: Yang Shengru) 1150606