Goldman Sachs Tips Shanghai to Lead Property Market Recovery

Shanghai will be among the first batch of Chinese cities to enter a property market recovery after bottoming out this year, according to US investment bank Goldman Sachs.

The US investment bank said the property sector's recovery will be led by first-tier cities, and will precede a nationwide rebound by six months to two years.

Home prices in cities like Shanghai and Shenzhen are expected to rise by 15 percent over the next three years, according to the recent analysis.

Shanghai has shown early signs of a rebound.

In March, Shanghai reported an month-on-month increase of 0.3 percent in new home prices, taking the lead among the 70 large and medium-sized cities tracked by China's National Bureau of Statistics.

The growth of Shanghai was the highest among the 14 cities that posted a price increase, which also included Guangzhou, Shenzhen, Hangzhou and Ningbo.

For existing homes, 31,215 units were sold in Shanghai in April, the highest in five years. That came amid central bank data showing a rise in mortgage lending.

The national property market still declined in the first quarter, with new home sales down 17 percent as mortgages continued to contract. The market has been in a slump since developer defaults on debt in 2021.

The data provided fresh evidence about the clear divergence between first-tier and lower-tier cities in China's property market, which has been in a "transitional" phase, Goldman Sachs noted, adding that the key is not that the market has "recovered" but that it has stopped moving uniformly: it is no longer moving as one cycle – it's splitting in two.

First-tier cities such as Shanghai, Shenzhen and Beijing were showing early signs of stabilization, supported by stronger income resilience, better liquidity, and faster policy transmission, according to the report.

Meanwhile, lower-tier cities continued to face structural pressure from excess inventory, weaker demand, and slower absorption cycles.