(Yicai) April 3 -- Second-hand home sales in Shanghai reached a near five-year high last month after the city relaxed purchase restrictions for residents not registered locally, among other measures.

Some 31,215 pre-owned houses changed hands in Shanghai last month, up 176 percent from February and 6 percent from a year earlier, according to local government data. The last time the figure topped 30,000 units was in March 2021, when it reached 39,400.

Shanghai issued a new policy to further relax home-buying restrictions for non-locally registered residents, including allowing those with a residence permit for more than five years to buy one home, on Feb. 25. The new rules also sharply increased the maximum housing provident fund loan limit and expanded the scope of property tax exemptions.

The latest data confirmed a strong return of market confidence, with the positive development mainly thanks to the new policy, said Li Gen, head of the Shanghai Lianjia Research Institute. The easing of home purchase restrictions and lowering transaction costs unleashed first-time buyer and upgrade-driven demand, pushing the second-hand home market toward a healthy recovery cycle of rising volumes and prices, Li pointed out.

In addition, home inquiries rose 28 percent last month compared with January, while the price index climbed 1 percent month on month, data from Lianjia showed. The average transaction period has also shortened to 39 days from 49 days in mid-2024.

The number of second-hand houses listed for sale in Shanghai continued to decline, with about 326,000 units (including duplicate listings for the same property) available on Anjuke as of March 30, down around 16,000 from the end of January, according to data from the real estate agency. 

In addition to the new policy, Shanghai's early-February pilot program allowing state-owned enterprises to acquire pre-owned homes and convert them into affordable rentals also effectively stabilized market expectations, said Cheng Yu, executive deputy general manager of the China Index Academy's local branch.

"Looking at the transaction breakdown, the proportion of cost-effective pre-owned homes priced below CNY3 million (USD435,690) beyond the Outer Ring Road has increased," noted Zhang Xiang, Shanghai analyst at the China Index Academy. “Buyers with genuine needs are showing a stronger willingness to enter the market, negotiation margins are narrowing, which lays the groundwork for price stability going forward.”

The overall real estate market in Shanghai has started to form a virtuous policy transmission channel, with policy support underpinning the market, the pre-owned segment leading the recovery, and the new home market following closely behind, Zhang said, noting that this will likely carry into this month.

Editor: Martin Kadiev