Luxury pre-owned flats become the hottest commodity in Shanghai

Prices of pre-owned homes in Shanghai have increased every month since December 2019, making the city the hottest market following Shenzhen 

As reported by South China Morning Post, Shanghai’s scarce supply of new homes and regulatory curbs have caused a buying frenzy by thousands of cash-rich buyers for high-end pre-owned flats, driving up prices in the secondary market to record highs.  

Many homebuyers had to pay an extra million of yuan to snatch a pre-owned apartment in the city’s downtown areas.  

Shirley Tang, senior director of Savills Shanghai residential sales, said, “Due to a limited supply of new homes in prime locations and the city’s new policies, high-net-worth buyers are facing more difficulties in securing their dream houses. Surging prices in the pre-owned home market indicate demand for luxury and high-end homes is high.” 

According to data gathered by tech news app 36Kr, around 6,000 units at 18 residential projects on Inner Ring Elevated Road will boost the market supply this year.  

Such addition is inadequate considering the financial capital’s population of around 25 million, particularly following a point-scoring system that has barred many from buying new homes.  

“The scoring mechanism does not appear to be fair to every buyer,” said Tracy Li, a senior manager with a global recruitment agency. “We may have to pursue second-hand homes because of the fierce competition in the primary market.” 

More: China’s April home prices spiked at the fastest pace in 8 months

As stated by the National Bureau of Statistics, prices of pre-owned homes in Shanghai increased by 0.7 percent month on month in May. Prices have jumped every month since December 2019, making it the second-hottest market after Shenzhen.  

Only a few high-end homes at prime locations have been listed on the market, leading to an aggressive bidding war as buyers can’t find units that match their budgets and preferences. 

The scramble has caught the attention of policymakers, who have cautioned about market exuberance to prevent a disaster similar to Japan’s housing market collapse in the late 1980s.