China's Home Property Market Has Green Shoots, With Limited Impact

Anlan Shanghai, a premium property project in Shanghai's central Xuhui District, sold its latest tranche of 100 apartments within 30 minutes of release on July 31, a traditionally slack season for homebuying.

The 100 residences, ranging from 169 square meters to 229 square meters, cost between 24.3 million yuan (US$3.6 million) and 42 million yuan, with an average selling price of over 170,000 yuan per square meter. The project was backed by China Overseas Land & Investment, China Merchants Shekou, Xuhui Urban Construction Investment and China Tourism Group Investment.

Is this a harbinger that the residential property market is starting to recover after a five-year slump triggered by oversupply, a liquidity squeeze and some developer defaults, or just a red herring?

"Buying an apartment is not like buying a piece of cake, but homes in Anlan Shanghai sold like hot cakes, despite such high prices," said Lu Wenxi, chief analyst at Shanghai Centaline Property.

He said the project features good location and design. But he admits to being somewhat bewildered by its popularity.

"It creates a delusion that Shanghai's property market is robust," Lu said.

The data tells a different story for Shanghai's overall real estate market. According to the National Bureau of Statistics, the index for existing homes sales in Shanghai in the first seven months of the year decreased 4.9 points from a year earlier, although it rose to a five-year high in March after the city relaxed purchase restrictions for non-local residents. In terms of new homes, the sales index gained 3.6 points, mainly bolstered by premium projects like Anlan in downtown Shanghai.

Local transactions for the January-July period show 170,365 existing homes changed hands, but they were concentrated on smaller units of 90 square meters or less, which accounted for 62 percent of transactions, and on those larger than 144 square meters. That leaves the bulk supply of homes between those sizes in a state of limbo.

"Shanghai's property market continued to improve but was quite divided," Lu said. "It is not healthy that market vitality was powered mostly by 'two extreme ends' of the market, while the bulk segment still lacks of momentum."

Shanghai is a snapshot of the housing market in China's largest cities. Beijing, Guangzhou and Shenzhen have also introduced incentives to prod sales of homes, but have so far failed to light a fire under the mid-sized market.

"Although the premium market segment can guide expectation to some extent, we really need to see movement in the mid-sized segment to see overall market improvement," Lu said.

Shanghai announced in February that non-locals holding a residence permit for more than five years or paying taxes in Shanghai for over one year could buy a home in designated areas of the city. Also, the city increased the maximum housing provident fund loan limit and expanded the scope of property tax exemptions.

The policy has helped boost sales, but the impact has been limited.

Shanghai authorities are piloting yet another incentive aimed at people who want to upgrade their housing but have failed to sell their existing abode. Such potential buyers do not act in a hurry and are reluctant to make a deal when housing prices show the slightest signs of decreasing.

In selected districts, including Xuhui, Jing'an and Pudong, state-owned property management firms are purchasing existing homes to convert them into government-subsidized rentals. They are starting with smaller residences in prime locations with nearby amenities. Since February, 551 homes have been acquired across the three pilot districts, and 16 households have purchased new properties.

The program will be expanded to more districts in the city starting this month.

"Compared with Anlan Shanghai, which is likely more of 'a marketing gimmick' with only 100 homes released at one time, the measures by the government are more down-to-earth to generate confidence among homebuyers," said Lu.

Last month, China's top leadership mapped out a strategy for the second half of the year, including a pledge of measures to stabilize the property market.

Some measures are already put in place. Starting from August 8, Beijing shortened to one year from two years a requirement for non-residents to have paid income tax or social insurance before buying homes within the city's Fifth Ring Road. The city also expanded housing provident fund support, increasing maximum loan caps up to 2.4 million yuan for couples buying a first home.

China's new home prices in July contracted but ‌at a slower pace. In first-tier cities, they remained flat but dropped 0.1 percent in second-tier cities and 0.3 percent in third-tier cities, according to the National Bureau of Statistics. The residential property market can't fully recover until people have confidence that prices won't drop further.

Asia Times discussed that expectations obstacle by citing an online post by a Henan Province-based columnist writing under the pen name Qingjin Wenwang.

"A friend of mine started looking for a home to buy ahead of marriage in late 2025," he wrote. "Back then, sellers were confident and showed little willingness to negotiate price. By June 2026, when he returned to the same district to look at similar properties, sellers had largely softened their tone and kept pushing him to sign a deal, leading to his fears that prices could fall further."