In recent years, China’s real estate market has been experiencing a continuous and deep downturn, with reports of plummeting housing prices coming from various regions. Shanghai, as the economic powerhouse of China, has also not been immune to this trend. Faced with enormous pressure to reduce inventory, the prime downtown area of Shanghai has recently introduced a new “housing voucher” policy, which is widely seen as further evidence of stagnant property sales in Shanghai.
The “housing voucher” system in Shanghai was initially piloted in the suburbs of Jinshan, Qingpu, and Jiading last year. This policy offers a third option, in addition to physical resettlement and cash compensation, for relocation households: a “housing voucher” with a specified amount and terms of use.
Rumors have been circulating that Pudong District, long-awaited, is considering implementing the housing voucher policy, while the Xuhui District in the city center has taken the lead. In the redevelopment plan for the Jiangnan Xincun area in Xuhui, a “housing voucher incentive” has been officially added, marking the formal entry of this policy into the valuable downtown area.
The key difference in Xuhui’s housing vouchers this time is their universality: they can be used for new and second-hand homes across the entire city, and the purchase period dates back to January 22nd of this year. The “housing voucher incentive” in Xuhui District is essentially a form of housing purchase subsidy.
Shanghai’s prominent financial influencer, known as “Master Mei,” bluntly commented on this, saying, “This once again proves that Shanghai’s houses are not selling well.” He pointed out that in the past, the housing vouchers in the suburbs were restricted to purchases within the specific area, which lacked liquidity. Moreover, those locations were often far away. In contrast, Xuhui’s new policy of “universal usage in Shanghai” may only be a drop in the bucket compared to housing prices, but it’s “better than nothing,” and it presents a greater temptation to encourage relocation households to use compensation for home purchases rather than holding onto cash.
“Master Mei” analyzed that Xuhui District, as an absolutely prime area in Shanghai, introducing housing vouchers still stems from the softening property market.
He believes that many relocation households, upon receiving cash compensation, choose to “hold onto their money,” expecting housing prices to continue dropping, with plans to “buy after the price bottoms out.” This kind of wait-and-see attitude leads to a negative “spiral downward” cycle, where the more they delay, the lower prices go, resulting in fewer buyers and perpetuating the downward trend. The essence of the housing voucher policy is to be a tool that compels funds to circulate back into the property market, aiming to break this cycle.
Shanghai residents have strong aversion towards the policy of housing vouchers as incentives for home purchases. Mrs. Wu quoted the viewpoint of her Shanghai friend, Mr. Chen, who sees the housing voucher system as “evil” and “immoral” because it essentially constitutes “invisible control and persecution” of personal property.
Mr. Chen believes that unlike cash resettlement, the money from the housing vouchers “can’t be used for anything else, only for buying a house.” This deprives relocation households of the freedom to allocate funds for renting, emigration, or investing in other assets.
He stated that housing vouchers usually come with a one or two-year purchase deadline, and once expired, they become void, creating coercive consumer pressure. He expressed that in the context where the market anticipates further housing price declines, this policy traps relocation households’ compensation into a continuously depreciating real estate asset, serving as a kind of “exploitation and squeezing,” completely ignoring personal preferences, showcasing a “dictatorial” display.
The personal experience of Mr. Peng, a Shanghai resident, further highlights multiple injustices in the system design. Ms. Wu revealed that Mr. Peng, known to her, was forced to move from the city center to the far outskirts, such as Chongming and Kunshan, after buying a house with housing vouchers. For Shanghai residents accustomed to city life, this represents a significant sacrifice and a forced relocation to the most remote areas.
While cash resettlement in the past could amount to millions, allowing siblings to clearly “divide the money,” now a single housing voucher can only purchase one property, leading to intense conflicts in families with multiple heirs concerning how to distribute the property. This situation could even trigger social and familial disputes.
Moreover, the face value of the housing vouchers is far from sufficient to purchase equivalent quality or satisfactory properties in the city center — it’s not even enough for houses in the suburbs, requiring relocation households to “chip in” their own money to afford a property. This makes them feel compelled to pay a high price when property prices are falling, making the system “highly unfair.
Ms. Wu grimly concludes that the current policies have led to a societal change: “Shanghai residents are basically disappearing in Shanghai.” She believes that those who can afford to stay in the city are the wealthy, while the original Shanghai residents who have been “driven out” by redevelopment projects can only settle in the outskirts, becoming a “forgotten clan.” This practice is seen by relocation households as “unethical,” “calculating against the common people,” and “evil.”
Ms. Wu, who is now settled in Hong Kong, disclosed to Dajiyuan that with the continuous plummeting of housing prices, several of her relatives who have purchased luxury homes in Shanghai and Shenzhen have ended up with negative assets, causing significant emotional and financial distress. This personal and familial economic predicament is the root cause behind the strong resistance from the market towards the housing voucher policy — the government stimulating citizens to buy homes and locking up compensations, thereby restricting their liquidity.
The perspective of Mr. Wang, a real estate agent in Shanghai, confirms the immense pressure faced by developers. During the interview, he mentioned that properties like relocation homes are currently unsellable because it’s not a favorable time for sales. The current housing market is under substantial price pressure, and even though the rental yield has dropped to three percent, it doesn’t necessarily imply it’s the right time to buy. What matters is the rental yield for some, while others focus on the buyer’s capital!
According to Mr. Wang, the property prices will never return to previous levels. He stated that starting this week, many new properties in Shanghai have been gradually reducing prices, with some even offering discounts up to eighty percent, and the prices might see further drops.
Mr. Wang indicated that developers are under immense pressure, with some willing to forgo profits of up to fifteen percent just to recoup their investments. Developers can no longer rely on high leverage and high turnover models. The pressure on capital chain turnover outweighs the pressure for sales profits, hence the ongoing norm of price cuts on new properties is for “survival” rather than making profits.
He pointed out that for over a decade, real estate had been viewed as the most stable “financial asset.” However, as the myth of “only going up and never going down” has been shattered, there has been a fundamental shift in market sentiment. Homebuyers no longer believe that property prices will always rise; they are now buying for homeownership rather than investment, demanding the highest “value for money” from properties.
Buyers are rigorously comparing new properties with resale properties, as well as weighing the current products against prospective ones to determine their advantages and disadvantages. Mr. Wang mentioned that the manifestation of “new property iteration expectations” and “price differentials widening” is evident in this mentality. If new properties lack significant price advantages, such as being discounted to eighty percent or lower, buyers prefer to wait, aiming for better locations and higher property allotment rates (such as products under new building standards).
Mr. Wang metaphorically likened the current developers to “patients with stomach problems,” implementing a strategy of “eating less but more often.” The scenes of hundreds of units being launched at once have disappeared, and now it’s common to launch in small batches (a few units or tens of units) to create a sense of high demand. Many property projects struggle to sell in the later stages (the fifth or sixth batches).
Despite the sluggish market, he believes there’s a paradox in land prices: land prices can’t drop, as authorities must ensure the value of land remains intact, leading to the inevitable increase in prices for prime locations in the future. This is hard for the market to accept, further restricting supply, and – instead of an oversupply of non-prime land (suburbs) constituting over 80% of inventory – developers refrain from utilizing low-priced land, which curbs supply.
Mr. Cheng, a real estate agent in Shanghai, pointed out the official policy dilemma. He stated that regardless of any stimulus policy the authorities may introduce now, it won’t bring property prices back up. Since 2023, Shanghai has successively introduced numerous new housing policies aimed at stabilizing property prices – controlling them from further decline – knowing it’s impossible to drive prices back up.
Mr. Cheng believes that only by completely lifting purchasing restrictions and removing any conditions can the excess inventory be swiftly cleared in the short term; however, it’s impractical for the authorities to fully unleash such measures (e.g., in August, only new properties outside the outer ring road were released, with limited effect, sustaining momentum for only half a month).
According to official statistics, as of September 2025, the average selling price of second-hand residential properties in Shanghai has “only” dropped by 2.4% year-on-year, but this fails to overshadow the drastic decreases in some local areas. Market observations reveal that prices in the outer suburbs and some suburban projects in Shanghai have plummeted by up to 40%, or even more, underscoring significant inventory and liquidity pressures.
A recent sharp drop in property prices at a Shanghai development has sparked widespread attention online. According to netizens, a Shanghai landlord reluctantly reduced the price by 6 million to sell a luxurious 86 square meter apartment in Zhangjiang, Pudong, offering a free terrace, a buy-one-get-one-free deal, a fully decorated duplex, sold for only 2.8 million.
Another blogger disclosed a property in Xujiahui, where the price was reduced by 5 million in half a year.
Recently, a Shanghai blogger posted about a severe drop in Shanghai property prices, stating, “The house that was worth 4.78 million in 2021 didn’t sell, and now it can only fetch 2.43 million, and it might need to drop to 2.2 million for a sale, nearly halving its value. I wonder if someone can make over 2 million in four years?”
It’s worth noting that on August 14, Lianjia in Shanghai began concealing the transaction prices of second-hand properties. A query on the Lianjia official website in Shanghai reveals that the historical transaction prices of second-hand properties in various neighborhoods were not displayed; simultaneously, on the Beike Fang platform, the historical transaction prices of properties in different neighborhoods also appeared as “no transaction prices available.”
Financial influencer “Poem of the Volcano” expressed that after Lianjia stopped showing transaction prices, second-hand properties have been pushed to the brink of desperation by intermediaries.