Shanghai has moved to further ease property purchase restrictions in its outer districts, aligning with similar policies enacted in Beijing to address weak housing demand and an oversupply of homes. This policy shift, announced by six city government departments, now allows eligible households—both Shanghai-registered and nonlocal residents who have paid social insurance or income tax for at least one year—to buy unlimited new and secondhand homes outside the city’s Outer Ring Road. Notably, the restrictions within the Outer Ring remain, as locals and singles can still only purchase up to two homes, but nonlocals who meet the eligibility criteria face no caps outside the ring. Importantly, single adults now count as households under the new policy, widening the pool of potential buyers [para. 1][para. 2][para. 3][para. 4].
The changes primarily target noncore districts of Shanghai, where excessive housing inventory has become a problem. Data provided by Li Yujia of the Guangdong Housing Policy Research Center reveals that 70% of Shanghai’s total new housing stock is located outside the Outer Ring, with a destocking cycle surpassing 20 months. Almost 40% of the city’s secondhand property listings are also concentrated in these regions, contributing to competition and downward price pressures between new and resale properties. As a result, some communities have seen price drops back to 2016 levels [para. 5][para. 6].
Earlier in 2024, prices for luxury and prime central properties reached all-time highs before retreating, while prices in the suburban, lower-tier districts held stable but with consistent discounts. Despite being among the top first-tier cities for property transactions, Shanghai has experienced a notable slowdown; from March to July, secondhand deals fell by more than 33% and new-home sales dropped by 25.6%, according to China Real Estate Information Corp. (CRIC) [para. 7].
Market analysts expect these recent relaxations to help revive market activity. For example, Zhu Jin of CSC Financial suggests Shanghai may see a rebound similar to Beijing’s, following its introduction of comparable policies. Founder Securities’ Yang Wenji anticipates improved sales, particularly in outer districts such as Jiading and Songjiang, and believes the change will enable some buyers to upgrade or enter the market for the first time. However, he cautions that this could divert demand away from smaller cities [para. 8].
Historically, Shanghai has had some of China’s strictest housing curbs, especially for nonlocals, who until recently had to pay five years of taxes or social insurance to qualify as buyers, with single nonlocals excluded from restricted zones. The broader national housing slowdown since 2021 has prompted more local flexibility. Since early 2024, Shanghai has progressively opened its market following central government signals to tailor policies to local needs [para. 9][para. 10][para. 11].
The effects of these measures have been mixed. Sales improved initially in late 2024 and early 2025, but momentum waned by midyear. Statistics from the National Bureau of Statistics show that although new-home prices rose from May to July, the pace slowed, and secondhand prices fell for three consecutive months, with the decline accelerating in July [para. 12].
Beijing set a precedent on August 18, 2024, announcing similar unlimited purchasing measures, which appears to have influenced Shanghai’s latest policy. Analysts believe Shanghai’s adjustment will alleviate pressure from the oversupplied outer districts, especially as supply has long been concentrated there [para. 13][para. 14].
Complementary to the purchase rule changes, Shanghai has also revamped housing finance policies. Banks can now set home loan rates based on market and borrower risk, rather than rigidly distinguishing between first and second homes. This is expected to lower rates for second-home buyers and stimulate demand. Additionally, public housing fund loan limits have increased, and regulatory tweaks support access to down payments. These steps are seen as even more comprehensive than Beijing’s, potentially leading to increased sales in the key September-October season [para. 15][para. 16][para. 17][para. 18].
AI generated, for reference only
