China’s real estate market is in turmoil with Premier Li Keqiang of the Communist Party recently calling for “stabilizing the property market.” Following this, Shanghai has further loosened restrictions on the property market – starting from August 26th, eligible resident families outside the outer ring road will not be limited in the number of properties they can purchase. However, this move aimed at boosting the property market has been deemed by analysts as a “destructive blow” to the surrounding “Shanghai peripheral” property market.
On August 25th, Shanghai introduced a new set of policies for the property market, primarily including four aspects: no limits on purchases for eligible residents outside the outer ring road; a substantial increase in the amount of provident fund loans, up to a maximum of 2.16 million yuan; no distinction in commercial loan interest rates between first and second homes; and an upgrade in property tax benefits, with non-Shanghai residents exempt from first-home property tax temporarily, while second homes and above enjoy a tax-free area of 60 square meters per person.
However, Shanghai hasn’t completely lifted restrictions on property purchases; it has only removed the limit on the number of properties for those who already had the qualification to buy outside the outer ring road.
Financial blogger “Ji Pangzi,” with 2.316 million followers on Douyin, mentioned that Shanghai introduced this new policy because houses were not selling well. He believes that the new policy for the Shanghai property market will not be effective since it only removes the limit on the number of property purchases without loosening the qualification criteria, which means there is no real relaxation. True relaxation would be allowing people from all over the country who want to buy houses in Shanghai to be eligible to do so; that would truly be lifting purchase restrictions.
On August 18th, Premier Li Keqiang of the State Council of the Communist Party chaired the ninth plenary session of the State Council. He emphasized the need to take strong measures to consolidate the property market and stabilize the declining trend. He stated the necessity to further enhance the efficiency of macroeconomic policy implementation to stabilize market expectations.
In recent years, China’s real estate market has been continuously declining. Public data shows that in July, the national sales of new commercial housing amounted to 532.5 billion yuan, down from 1.015 trillion yuan in June. The new construction area of real estate is lower than the sales area of new commercial housing, resulting in a decrease in new house prices, with a decline in the prices of second-hand homes in first-tier cities.
Chen Wenjing, Policy Research Director of Zhongzhi Research Institute, remarked that the emphasis of the State Council meeting is on “systematically clearing restrictive measures in the consumer sector,” and it is expected that restrictive measures on housing consumption will be further adjusted and optimized, such as more cities canceling sales restrictions.
Renowned Shanghai blogger “Master Mei,” with hundreds of thousands of followers, stated that the high-level officials of the Communist Party once again calling for stability in the property market, and Shanghai’s introduction of new property market relaxation policies, are aimed at “supporting housing prices.” “Master Mei” pointed out that the primary reason is the poor performance of the Shanghai real estate market in the first half of this year, especially in the second-hand housing market. In the past year or so, the entire Chinese real estate industry has faced very severe challenges.
Reports from “21st Century Economic Daily” have confirmed this trend: based on data from Shanghai Centaline Property and CRIC Research Institute, it is estimated that the relaxation of property purchase restrictions mainly focuses on the outer regions of the city, which are the areas with concentrated inventory. Currently, the new housing inventory in the outer regions of Shanghai accounts for 80% (based on the number of units), with about 60% of transactions. The clearance of new housing inventory in the outer regions of Shanghai still faces certain pressures.
According to reports from authoritative institutions such as the China Real Estate Index System and Zhongzhi Research Institute, in July 2025, the average price of second-hand residential properties in one hundred cities across the country fell by 0.77% compared to the previous month. As of June 2025, the prices of second-hand residential properties had been declining for 28 consecutive months on a monthly basis, and even more significantly, had been falling on a yearly basis for 30 months in a row.
Recently released data for July from 70 major cities in China showed a decrease in sales prices for commercial residential properties in various cities. In July, second-hand residential sales prices in first-tier cities fell by 1.0%, expanding by 0.3 percentage points compared to the previous month. Among them, Shanghai saw a decline of 0.9%.
“Master Mei” mentioned that the 0.9% drop in second-hand housing prices in Shanghai indicates a monthly decrease of around 1% – a significant decline considering the consecutive months of price drops, which has become unbearable for many. The new policies in Shanghai have had a deadly impact on the surrounding “Shanghai peripheral” property markets, such as Kunshan in Jiangsu, Qidong, and Jiaxing in Zhejiang. Previously, many people without qualifications to buy property in Shanghai would opt for these areas, causing property prices in the surrounding regions to skyrocket between 2020-2021.
However, with Shanghai relaxing purchase restrictions, these “Shanghai peripheral” properties have lost their main appeal – serving as a “springboard” to enter Shanghai. This directly affects the vital interests of hundreds of thousands, or even millions, of ordinary families.
“Master Mei” expressed that as the tide goes out, properties in these peripheral areas have plummeted in value because they are simply not worth much.
He highlighted that in Qidong, Jiangsu Province, the “Venice of the Sea” project by the Evergrande Group has suffered the most severe decline in prices. Initially promoted as the “backyard of Shanghai” by Xu Jiayin, the property prices there have drastically fallen from their peak, with high vacancy rates and deep price cuts on many units.
The “Venice of the Sea” is located in the Roundabout Cape Tourist Resort in Qidong, Jiangsu, adjacent to Shanghai’s Chongming Island. Over the past few years, it had lured a significant number of buyers from Shanghai due to its pitch as the “Backyard of Shanghai” and a price gap compared to Shanghai.
Currently, the project is facing severe difficulties, with high vacancy rates, a substantial fall in prices compared to the peak, and even significant price reductions.
Some social media platforms have documented videos at the “Venice of the Sea,” depicting that out of ten units, there isn’t a single one occupied.
“Master Mei” mentioned that renting a property at the “Venice of the Sea” is incredibly cheap. However, there are even more disastrous situations in Qidong, such as at the “Green Island of Qidong,” where prices have plummeted by 70%. It is a project of Shanghai Greenland Real Estate developer. At the peak, prices had reached 12,000 yuan per square meter, but they have now fallen to about 3,000 yuan per square meter.
He believes that Shanghai’s latest property market move is plunging another knife into the “Shanghai peripheral” plate, causing prices to possibly drop by half to around 1,500 yuan per square meter, leaving local homeowners in despair.
Admitting that as a property owner in Shanghai, he hopes for rising prices, but he understands that such “divide and conquer” policies come at the expense of the interests of surrounding areas. This real estate game ultimately turns many ordinary families into “sacrificial pawns.”