One Week After Shanghai Real Estate New Policies: Demand Side Rebounds, Second-Hand Homes Welcome a "Good Start"

Since the new real estate policy was announced in Shanghai on February 25, it has been a week, and the recovery of the second-hand housing market in Shanghai has exceeded market expectations.

According to data released today by the China Index Academy, during the first weekend after the policy was implemented, the Shanghai second-hand housing market responded quite noticeably, with a peak of 1,013 transactions in a single day, showing strong rebound momentum. From the weekly transaction data, the online signing data for Shanghai’s second-hand homes indicates that the market quickly warmed up after the new policy’s first week (2.25-3.3), with an average of 685 units sold per day that week.

Zhang Wenjing, General Manager of Shanghai Data at the China Index Academy, emphasized that because the two weeks before the policy release (2.11-2.24) coincided with the Spring Festival holiday, the daily transaction volume was only 63 and 188 units, respectively, which significantly disrupted short-term trading rhythm. Excluding the holiday effect, the third week before the policy (2.4-2.10) saw an average of 677 second-hand homes sold per day under normal market conditions.

Luo Wenxi, an analyst at Centaline Property, stated that the biggest recent positive for Shanghai’s real estate market is that the new “Seven Policies for Shanghai” were announced immediately after the second day of returning to work after the Spring Festival, greatly releasing demand for both first-time and improved housing.

“The ‘Seven Policies’ have had an immediate effect on boosting the second-hand housing market. It’s clear that after the new policy, the market not only quickly shook off the low transaction volume during the holiday but even surpassed pre-holiday trading levels. This indicates that the current policies effectively stimulated housing demand, especially significantly boosting the second-hand market, and market confidence has recovered relatively quickly,” Zhang Wenjing said.

Sherwin-Williams China Research Department head Xie Chen told reporters that there are many highlights in this policy, including a phased relaxation of purchase restrictions, breaking the previous standard of social security as a qualification criterion—holding a residence permit for five years can qualify for home purchase—and expanding coverage to stable working populations in Shanghai.

“Significantly increasing the mortgage loan limit for public housing fund loans can effectively reduce the monthly payment pressure for first-time and improved households. For buyers who already have the intention to purchase, these measures strengthen their confidence and accelerate their entry into the market, which will have a positive impact on increasing market transaction activity,” Xie Chen said in an interview.

Compared to the rapid warming of the second-hand market, the transaction data for new homes remains relatively flat.

Data from online signing shows that during the first week after the new policy (2.25-3.3), the average daily transaction volume for new homes in Shanghai was 220 units, lower than the 483 units in January and the 405 units in the first week of February. Zhang Wenjing explained that this is mainly because the new supply of new homes in February was limited, and market transactions mainly relied on digesting existing stock.

In terms of transaction structure, the proportion of new home transactions inside the outer ring showed a “rise then fall” pattern: from 9.1% on February 25 to 31.3% on March 1, then falling back to 7.8% on March 3.

“This fluctuation may reflect that the new policy temporarily boosted buyer confidence in the inner outer ring areas, but regional differentiation will need further observation,” Zhang Wenjing said.

Although new home transaction data remains relatively stable, industry insiders believe that the overall impact of the new policies will gradually become evident in the future.

According to data disclosed by 58 Anjuke, during the first week after the policy was implemented, demand-side activity in Shanghai’s housing market rebounded rapidly, with the number of proactive online chats (note: online dialogue tool) increasing by 97.6% week-on-week, and the conversion rate of inquiries to contacts rising by 180%. An analyst from the platform told reporters that multiple indicators show that Shanghai’s new policies effectively lowered the barriers to homeownership, mobilizing a large number of potential buyers’ inquiries, which are expected to translate into actual transactions soon.

Luo Wenxi pointed out, “The ‘Seven Policies’ not only meet market expectations and stabilize outlooks but also help boost buyers’ enthusiasm. Meanwhile, Shanghai’s housing market is in a positive recovery phase, with a warm winter market in the fourth quarter of last year, and market activity continues to rise.”

“The foundation for a good housing market is solid, and combined with the positive effect of the new policies, Shanghai is likely to lock in an early ‘small spring’ market. Based on recent market performance, with daily second-hand home transactions exceeding 1,000 units at times and visitor numbers steadily increasing, we expect Shanghai’s small spring this year to perform significantly better than the same period last year,” Luo Wenxi concluded.