Shanghai Purchases 523 Used Homes for Social Housing to Stimulate Real Estate Market

Since February of this year, Shanghai has been purchasing used homes to serve as subsidized rental housing (social housing), and has acquired 523 units to date. Experts point out that this move by Shanghai helps stimulate circulation in the used housing market, and data shows that transaction volumes for used homes in Shanghai have risen since March. According to a report by mainland media outlet Yicai, the official WeChat account of the Shanghai Municipal Housing Security and Housing Management Bureau announced that from the beginning of February until now, Shanghai has acquired 523 used homes for a pilot program of subsidized rental housing. The acquired properties are concentrated in the three districts of Xuhui, Pudong, and Jing'an, focusing on small-sized existing homes under 70 square meters (about 21 ping) and priced below RMB 4 million (NT$18.5 million). Judging from their location, size, and price, most of these acquired properties are 'old, dilapidated, and small' units in core areas. The Shanghai housing authority also stated that the acquisition of used homes is expected to expand to all central urban districts. In the second quarter of this year, the pilot scope has already been extended to several central districts including Huangpu, Changning, Hongkou, Putuo, and Yangpu. The report indicates that Shanghai launched the used home acquisition work on February 2, adopting a model of 'government guidance, state-owned enterprise implementation, and market operation.' It prioritizes areas with convenient transportation, industrial clusters, and strong rental demand, focusing on small-sized units. After renovation, the acquired properties will be uniformly integrated into the subsidized rental housing system, with rents expected to be below the market average. According to a report by Wen Wei Po, the payment for the acquisitions uses a 'housing voucher' mechanism, converting the value of the acquired used home into a voucher amount, with the funds placed in a supervised account. Furthermore, these district-issued vouchers are 'valid city-wide for both new and used homes,' with a validity period of one year. The report quotes Yan Yuejin, deputy dean of the E-house China R&D Institute Shanghai, who analyzed that Shanghai's acquisition of used homes for the subsidized rental pilot has a threefold value: first, to rapidly expand the supply of subsidized rental housing in central urban areas and improve the dual system of renting and purchasing; second, to solve the problem of residents' difficulty in upgrading their homes, reduce transaction costs, and achieve housing improvement; and third, to stimulate the circulation of the used housing market, drive the sale of new homes, and promote a virtuous cycle in the real estate market. The Yicai report points out that since March, the transaction volume of used homes in Shanghai has increased. According to statistics from Anjuke Shanghai, as of the 19th of this month, the transaction volume for used homes in Shanghai in May reached 16,000 units, a year-on-year increase of 26%.