In recent years, the Shanghai property market has been considered one of the most resilient, with many unable to afford a home. However, with the impact of layoffs and unemployment hitting hard, the market has taken a downturn, leading to more and more people facing the dilemma of being unable to sell their properties. The price drop in second-hand homes is particularly significant, with prices in some areas almost halved. Industry insiders analyze that the prices of 80% of Shanghai’s properties will continue to decline in the future.
Citizen Li Fang told Epoch Times that she owns a small one-bedroom apartment near the Central Line. In just one year, the price dropped from 3.8 million yuan to 2.4 million yuan, a drastic drop that she finds hard to accept. “Previously, the prices were very high; it used to sell for 3.8 million yuan, now it can only be sold for two to three million yuan, dropping so much in just a year.”
It’s not just ordinary residential properties; even the luxury housing market is not spared. Now, all houses on the market are facing the same pressure, requiring price reductions to sell. Real estate blogger “Bright Moon Real Estate” revealed on a program that a luxury property that once peaked at nearly 100 million yuan now only sells for just over 40 million, a drop of nearly half. “Many people thought luxury homes would not decrease in price, but when homeowners are eager to sell, they have no choice but to slash prices significantly.”
Official and private opinions on the extent of the price drop in Shanghai differ. Insiders say that according to official statistics, it appears to have only dropped by 20%, but in reality, it is much more than that. 99% of those who bought property after 2018 have suffered losses, even the relatively resistant downtown blocks have been severely affected.
“But Finance” blogger cited the Jing’an District and the relatively resistant emerging community “Jing’an Mansion” as an example. In July 2022, a small three-bedroom apartment of over 90 square meters was sold for 13.48 million yuan, but by June this year, a similar-sized unit was sold for 9.75 million. On the surface, it looks like a loss of 3.73 million, but factoring in taxes, renovations, three years of interest costs, and agency fees, the total cost is 14.89 million, resulting in an actual loss of 5.14 million over three years, a drop of about 34.5%.
Most buyers in this community are basic salaried workers, equivalent to someone earning an annual pre-tax income of 2.5 million yuan, seeing their three-year earnings go to waste. Therefore, the plummeting property prices have a significant impact on household finances.
The current wave of unemployment and salary cuts further exacerbates the pressure on home buyers, with many families unable to bear the burden of mortgage repayments, leading to a notable increase in foreclosures and auctioned properties.
Shanghai resident Chen Yi (pseudonym) told Epoch Times that currently, there are a significant number of people being laid off and unemployed, and many around him are forced to sell their homes due to inability to repay loans. “In this environment, hardly anyone dares to buy a home randomly; people are not interested in buying properties.”
Industry insiders predict that about 80% of Shanghai’s property prices will continue to gradually decline, with only 20% remaining stable. Overall, the property market’s winter is far from over, and both homebuyers and investors need to make careful judgments.