A glimmer of hope: Shanghai’s property market rises

China’s first-tier cities are showing signs of stabilization in the property market, with Shanghai emerging as the strongest performer amid the broader market downturn. According to data released by the National Bureau of Statistics on February 19, Shanghai posted a 0.4% month-on-month increase in new home prices in January — the highest growth rate among China’s 70 major cities. Property wealth effect key for luxury consumption The stakes are particularly high for China’s consumer economy, as real estate represents over 70% of household wealth, according to the People’s Bank of China. This concentration of wealth in property has historically driven discretionary spending through the wealth effect, making market stability crucial for luxury consumption patterns. Shanghai’s property market has shown strong momentum following Chinese New Year. Transaction volumes for pre-owned homes reached 7,583 units by February 17, with total monthly sales expected to match 2022 levels at around 15,000 units, according to Chinese real estate platform Anjuke. The city’s new residential property market saw transaction area surge 63% month-on-month to 55,500 square meters in mid-February, Centaline Property reports. This uptick in Shanghai contrasts sharply with the national picture. While Beijing, Guangzhou, and Shenzhen each recorded modest 0.1% monthly house price gains in January, the broader market remains stagnant. Reuters calculations indicate new home prices nationally were flat month-on-month, while existing home prices in tier-two and tier-three cities fell by 6.0% and 8.2% year-on-year, respectively. Policy support and market intervention The market’s fragility is highlighted by continued developer distress. China Vanke, one of the country’s largest developers, recently received a 42 billion RMB ($5.8 billion) bailout loan from state backers, underscoring ongoing sector risks. The International Monetary Fund notes that housing starts have plunged over 60% from pre-pandemic levels — among the sharpest declines globally in three decades. Because of these challenges, China’s central bank this week pledged new support measures for this year, including improved real estate financial management and a new development model. For luxury market observers, Shanghai’s outperformance signals potential stabilization in premium segments, even as the broader market faces continued pressure from high inventory levels and demographic headwinds. However, the correlation between property values and discretionary spending suggests that sustained market weakness will continue to negatively impact luxury consumption patterns nationwide over the short term. The Jing Daily Data Snapshot analyzes the latest data on China’s luxury and lifestyle markets.

A glimmer of hope: Shanghai’s property market rises

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Published February 22, 2025

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A glimmer of hope: Shanghai’s property market rises