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SHANGHAI: Buying a new apartment in Shanghai these days requires more than just cash - it takes stamina, luck - and sometimes a bit of theatre.

At a recent weekend launch of One Tian An Place, a mid-range project in the well-established Jinyuan area of Minhang, hopeful buyers queued, clutching numbered slips that determined the order they could enter to claim a unit before the red “sold” tags went up.

One successful buyer, who drew a lottery number well past 60, described the process as “a bit nerve-wracking” - but ultimately worth it.

“The (unit) floor was a bit lower than we expected but it doesn’t really matter as long as it doesn’t affect the lighting,” he wrote on Xiaohongshu on Sep 7, under the handle Zaoshuizaoqiba.

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“Land prices keep rising,” he added. “We were really worried we might not be able to afford anything later. Since (the unit) was still under 100,000 yuan (US$14,042) per square metre, we just wanted to get on board quickly.”

“The earlier you buy, the more peace of mind you have.”

By the end of the day, sales agents reported around 90 per cent of units had been sold.

But for 33-year-old Andree Wu, also looking to buy in Shanghai, the search has been less successful.

Living in Putuo District with her husband, child and dog, she began house-hunting in February after giving birth, hoping to find a larger three to four-bedroom apartment.

Months later, she is still looking - even after raising her budget from 15 million yuan to 25 million yuan, opening the door to more choices.

“There are only houses that excel in one aspect but are very poor in another,” she told �鶹.

“The house we really want just doesn’t exist.”

Still, Wu admitted the recent policy support played a role in stretching her budget. 

“The lower mortgage rates made me more willing to raise my budget ... Lower rates have reduced the pressure somewhat,” she said.

Both cases reflect the buyer enthusiasm fuelling Shanghai’s property market, where high-spec central projects are snapped up almost immediately. 

On Jul 2, financial outlet Yicai reported that five mid- to high-end projects sold out on their first day.

But these frenzied sell-outs mask a deeper malaise.

Nearly a year after China launched its most aggressive property stimulus in decades, the housing market remains sharply bifurcated.

Pockets of buoyancy endure in luxury enclaves of Shanghai and a handful of top-tier cities.

Elsewhere, demand is anaemic. 

Average new-home prices continue to edge down while land sales in fourth- and fifth-tier cities have plunged to their lowest levels since 2011.

China’s property market, once the country’s growth engine, now runs on two tracks - roaring at the top, stalling everywhere else.

The big bang package may not restore the property boom - only blunt the pain, analysts argue.

BIG BANG MEASURES - AND THEIR LIMITS

The September 2024 stimulus package was a sweeping attempt to turn the tide. 

Beijing cut existing mortgage rates by 50 basis points, delivering savings to an estimated 50 million households. 

Down-payments were standardised at 15 per cent for first and second homes. 

A 300 billion yuan affordable housing re-lending facility was fully funded, while other measures ranged from "white list" financing to revitalising idle land and easing purchase curbs in mega-cities.

The measures, announced at a State Council press conference on Sep 24 last year, were aimed at clearing unsold inventory, reviving housing demand, and stabilising prices, according to the government’s official policy summary.

Yet the backlog keeps growing.

According to data released by China’s National Bureau of Statistics (NBS), the number of unsold new homes rose to 405 million square metres in August 2025, from 382 million square metres in July 2024.

“My sense is that (the measures) have almost zero impact (on moving the property market),” said Lin Han-Shen, China country director at The Asia Group.

“If I was to look at what the primary driver is to drive more purchases of property, it's if the properties rise in price.”

“The Chinese are not deep value investors,” Lin said. “They do not buy when prices are low. They tend to buy when prices are going up.”

Wang Dan, China director at Eurasia Group, agreed. “There was not a single policy that has achieved any of the effects to reverse the housing cycle,” she told �鶹.

“What the policies have been doing so far is basically to try to stimulate more of a demand among potential homebuyers,” she added.

“Housing prices are still going down - that’s why it didn’t work.”

Except for one city: Shanghai.

Standing out from the pack, the city posted a 5.9 per cent year-on-year increase in new-home prices in August, according to NBS data released on Sep 15.

Despite that, average prices across China’s four top-tier cities - Beijing, Shanghai, Guangzhou and Shenzhen - still fell 0.9 per cent from a year earlier, as declines in the other three outweighed Shanghai’s gains. 

In second-tier cities, prices fell 2.4 per cent, while third-tier cities saw a 3.7 per cent drop.

Analysts pointed out the misalignment between market hopes and Beijing’s intentions.

“There is a misperception in the market that the government wants the property market to recover. That is not true,” Lin explained.

“Certainly, the government does not want property to make up 30 per cent of GDP the way it used to,” Lin added. 

“So if that's the definition of recovery, that is not what the government desires. What it does desire is a stabilisation.”

Wang echoed the point, saying the central government “doesn't believe that housing should be the main growth engine for China anymore”. 

Citing how the Chinese leadership under President Xi Jinping believes the new engine should be productivity, Wang said: “The resources and the policy support are basically in those high-tech industries, emerging industries, manufacturing.”

China is therefore careful not to inflate another property bubble, instead focusing its measures on cushioning a drawn-out correction, analysts noted.

Lin put it this way: “The government knows three things have to happen. Market prices have to go down - but not too quickly. Developers have to consolidate - but not too quickly. Banks have to write off nonperforming loans - but not too quickly. So it's a matter of buying time right now in the sector.”

NATIONAL PICTURE: SLUMP BEYOND TIER-ONE CITIES

“(The pricing) in tier-one (cities) is generally more resilient than tier-two and tier-three,” said Sam Xie, head of research for China at CBRE.

But even China’s largest cities are not immune.

“More people are selling in Beijing than buying. It actually would drag the housing prices down even faster,” said Wang.

Outside a few policy-induced bursts, most of China’s market remains in the doldrums.

Goldman Sachs in June estimated a cumulative 20 per cent drop in home prices from peak to trough - and expects another 10 per cent fall before stabilisation in 2027.

Investment has also cooled. 

Total real-estate development between January and July reached 5.36 trillion yuan, with residential investment at 4.12 trillion yuan - far below the 6.09 trillion yuan and 4.62 trillion yuan recorded in the same period of 2024, and below the earlier highs, when real estate development investment peaked at 14.7 trillion yuan in 2021.

China's land market, once a vital fiscal engine for local governments, has nearly ground to a halt in lower-tier cities.

Land transaction values hit decade-lows in third- to fifth-tier cities, the Financial Times reported, citing Wind data. 

In the first half of 2025, fourth-tier cities generated just 87 billion yuan in land revenue, while fifth-tier cities brought in 51 billion yuan.

By contrast, state-owned developers focused on Beijing, Shanghai, Guangzhou and Shenzhen, helping push first-tier land sales up about 30 per cent in value from a year earlier, according to the Financial Times.

Amid the gloom, some buyers are returning not because of stimulus, but because prices have finally fallen within reach.

In Beijing, 30-year-old office worker Olivia Zhang and her husband bought their first home - a second-hand two-bedroom unit of about 60 to 70 square metres - in July, after prices fell to what they considered “reasonable”.

“Even though our salaries are higher now than a few years ago, the prices back then still felt unaffordable and not worth it. The price drop definitely encouraged us to buy,” Zhang said.

Their modest flat near Sihuidong station, between the Fourth and Fifth Ring Roads, cost 3 to 4 million yuan.

Buying second-hand was the only realistic choice.

“There are basically no new apartments (within the Fifth Ring) anymore,” Zhang said. New builds further out would have meant worse commutes.

“Since we’re young and both working, we prioritised a good location.”

It’s the kind of “old, small and shabby” place many end up buying within this budget.

Purchased as a marital home rather than an investment, Zhang added: “Whether prices go up or down doesn’t matter much to us.”

"We’ll keep living here, and we don’t plan to sell.”

While homeownership remains a prerequisite for marriage in many circles, expectations are evolving.

“With the younger generation … there’s a higher willingness to rent. It’s cheaper and they’re more mobile,” said Wang from Eurasia Group.

“They have to change up a lot,” she added. “So between different cities, it’s just easier if they rent homes.”

Yet the social norm is sticky. “If you want to get married, buying a home is still a robust requirement, especially from the women’s family,” she added.

As young people delay marriage, “the demand for housing is also later, and that is another downward pressure.”

Meanwhile, persistent oversupply continues to weigh on the market. 

Developers are sitting on vast inventories, with Goldman Sachs estimating 30 trillion yuan worth of unsold homes.

New-home demand is projected to remain 75 per cent below its 2017 peak for years to come.

Even official efforts to clear the stock - such as through purchases by state-owned firms and local governments - have seen tepid results.

“No one is going to buy an overvalued asset, and everybody knows that those assets are overvalued,” Wang said. “So they're not going to enter the market at this point.”

Lin from The Asia Group, attributes much of the inertia to a mismatch: “The inventory buildup versus the actual demand, that mismatch gap is going to continue to get wider.”

CBRE’s Xie noted that developers remain highly cautious in the current environment.

“They are primarily focused on land banking in tier-one and upper tier-two cities,” he said. “For lower-tier cities, the top priority is ensuring that overdue projects are completed and delivered.”

The divide is stark.

According to data, nationwide investment in residential development declined by 10.9 per cent year-on-year during the first seven months of 2025, while investment in Shanghai grew by 3.3 per cent over the same period.

Lin offered a telling example. 

A personal trainer he knows - a young man with modest income - said he owned five apartments in Anhui, accumulated through a mix of inheritance and purchases over the years. 

Yet he admitted he could never trade up into a city like Shanghai, even if he sold all five. 

To Lin, this was symptomatic of a deeper glut in lower-tier cities, where demographic inheritance and limited mobility have locked properties into limbo. 

“You are certainly seeing a tale of two cities,” he said - one of excess and stagnation in the hinterlands, and one of cautious recovery in wealthier urban cores.

In some places, prices barely matter - because homes simply aren’t changing hands. 

“You don’t pay attention to prices anymore,” said Lin. “It’s just that the volume of transactions is frozen.”

While no second-tier city is experiencing anything close to a rebound, Wang noted that some are benefiting modestly from demographic shifts. 

“Some cities like Chengdu and Changsha are attracting more of a reverse migration,” she said. “because many people, if they lose their jobs in Beijing and Shanghai, which was the case in the past few years, then they would return to some vibrant city in central China.”

“There is some support because of the population inflow for the local housing market (in cities experiencing reverse migration),” she said. 

“But it's not enough to really drive up housing prices simply because the supply is too high.”

OUTLIER CITY

If China’s market is still groping for a bottom, Shanghai, at least parts of it, has found a way to float.

Despite national price declines, buyer enthusiasm has swept across several well-located and high-end developments.

Especially popular are centrally located luxury towers and suburban homes built by trusted developers.

In both cases, tight supply and a deep pool of affluent local buyers are fuelling the frenzy.

That includes Kangding Garden in Jing’an District, which drew Wu’s attention.

Priced around 168,000 yuan per square metre, she joined the buyer lottery for the project’s third-phase sales - without success.

“For that project, apart from the price, I thought there were no drawbacks,” she said. 

“If it completely meets my needs … even if I buy at a higher price, I don’t mind. I just treat that extra cost as consumption.” 

Recent policy shifts have also fanned momentum.

In late August, Shanghai authorities scrapped per-household purchase limits outside the Outer Ring Road, where more than two-thirds of the city’s housing stock is located.

Residents can now buy an unlimited number of flats in these zones, up from a cap of two.

Mortgage rates for second homes were cut to 3.05 per cent, matching first-home rates for the first time.

Restrictions on non-locals were loosened too: since late 2024, buyers from other provinces need only 12 months of tax history in Shanghai, down from three years.

Yet Shanghai’s resilience is not evidence of a broad-based recovery. 

“No, I don’t think so,” said Wang, when asked if this rebound might signal a national trend.

“Policymakers know that Shanghai is a different market … It is very lucky that people still view it as good, investable assets. But in the majority of China, this is not the case."

"So Shanghai's market is fundamentally different from the rest of the country,” Wang said.

“It is a safe asset.” 

After four years of declining home prices, she explained, many Chinese believe the national market has yet to reach bottom - and are unwilling to buy into an overvalued asset without clear upside.

“Right now, the stock market is performing really well. Whoever entered the market since last September has made money,” Wang said.

“But if people have put money in housing as investment, then most people wouldn't be able to make any money, or they will make a big loss.” 

In contrast, she said, certain districts in Shanghai have bucked the trend. 

“Since 2022 … the prices have even gone up,” she noted. “So it’s considered more as an investable asset rather than a place to live.”

Lin, at The Asia Group, attributed Shanghai’s divergence to structural forces.

“Rich people will always have capital to invest. And because of capital controls, it's not easy to go outbound,” he said.

“Shanghai has the deepest pool of capital in China with such a concentration of the well-off. If they have to put their money somewhere, I can see some of it coming back into property.”

Even within Shanghai, however, this upturn is narrow and uneven.

Lin described “a much humbler aspiration” among ordinary households: “If the mass market is very concerned about prices going down for their property, then … we're going to see much more modest consumption habits going forward.”

THE RIPPLE EFFECT - WHY IT MATTERS

The weakness in China's property market is more than a drag on GDP - it carries social consequences.

For years, housing was a major social anchor - a prerequisite for marriage, a store of family wealth, a trigger for big-ticket consumption. Today, those assumptions are fraying.

Lin puts it down to a generational shift. “When I look at my students, their consumption preferences are quite a bit different than when I first came (to China) 20 years ago,” he said. 

“They seem to aspire to experiential spending. And they seem to be less concerned in the accumulation of assets or goods, including property.”

Part of the reason, he suggests, is confidence they will eventually inherit property.

“If that is the case … where people are quite comfortable (and doing) experiential spending, and waiting for their property inheritances, it’s not a good sign for the outlook for future developers.”

Others are simply locked out. Even with home prices falling, many young Chinese still can’t afford to buy.

“The gap between purchasing power, the multiple of your salary, the number of years you had to save up to buy a property … it’s just still too wide for the vast majority of the younger generation,” Lin said.

Wang of Eurasia Group noted how consumption has changed. “Before 2022, the biggest portion of the household consumption is tied to apartments,” she said.

“So for an average Chinese family, if they didn't buy a new apartment, there would be no big item consumption. Like the aircon, fridge, cars - these are tied with housing and also decoration.”

One apartment purchase, she noted, could trigger half a million yuan in related spending. Now, that ecosystem has atrophied.

“After the housing downturn, after 2022 ... (household consumption) is mostly just (on) daily necessities, consumer goods, more services, more cultural goods, and tourism,” she said.

“You can (take) 2,000 trips, but still it doesn't compare to buying one home and instead (spending) a million on decoration.”

Among the wealthy, trust in property as a “safe” asset has splintered.

“Those that were able to get into the property market earlier … they’re in a better capacity to enjoy the pleasures of their wealth through buying other luxury properties,” Lin said.

For them, purchases are driven by lifestyle aspirations.

“When you buy a property, it could be for a property to act as your pension. But I don't think that's the main driver for the richer class … for them, it's still very much a quality of life, aspiration.”

For the vast majority, housing is no longer the cornerstone of financial security it once was, he said, adding that property is now just “one potential asset class among others” alongside gold and government bonds.

Meanwhile, local-government finances have weakened dramatically.

With land-sale revenue collapsing in lower-tier cities, budget gaps are widening.

“Every city, every county, every province has a sizeable budget gap that can no longer be filled by land sales,” Lin warned.

“And for the most part, issuing more debt is problematic as well. So they're going to have more austerity.”

The global knock-on effects are still unfolding. 

Fears of a Lehman-style crisis have faded, analysts noted, but a sluggish Chinese housing market will continue to ripple through global demand, commodity prices, and investor confidence.

"(The property sector) is going to continue to be a drag on the economy for at least the next five-plus years or so," said Lin. 

"But as long as it's not a drag enough (and still) allow a transition to a technology-driven economy, that’s okay."

“The government will do what it needs to just stabilise (the property market).”

That future, he suggests, may lie not in another property supercycle, but in a rotation of capital into tech, green energy and industrial upgrades. 

“We’re starting to see some signals from the trigger of … technology driving the stock market,” Lin said. 

“If China’s stock market continues to steadily go up … that will boost the wealth effect, and maybe help compensate and drive consumer spending.”

WAITING FOR THE BOTTOM

Few expect China to return to the old playbook.

Analysts suggest the current approach is longer-term and deliberately cautious - not to re-inflate a bubble but to manage a drawn-out adjustment.

Wang believes the sector’s role is being rewritten.

“The future of Chinese housing, I believe, is permanently lower prices than before,” she said.

“More homes need to be built in the future, but it wouldn't be built in a similar fashion as before. A lot of the construction will be done by the state sector, by state-owned enterprises, instead of private businesses.”

With 2025 marking the final year of both the 14th Five-Year Plan and the “Made in China 2025” strategy, attention is turning to the Fourth Plenum expected in October - where senior leaders may clarify Beijing’s long-term posture. 

And observers do not expect a dramatic shift.

“What (the government) does desire is a stabilisation,” Lin said.

“It’s a much more modest goal, but the market has not understood that yet.”

“They're still looking for some form of bailout, still looking for some major form of stimulus … and that's not likely around the corner.”

“I suspect in the upcoming plenum, people will be disappointed as well.”

For many families, policy comes second to something deeper: the belief that a home anchors their future.

Zhang in Beijing said: “My husband, who’s from Hebei, has always rented here and lacked a sense of belonging.”

“Buying a place makes him feel he finally has a home.”

Back in Shanghai, Wu has eased off the panic.

“Before, I thought housing prices would keep rising, so I felt very anxious, like if I didn’t buy now I’d never be able to afford it,” she said.

“But now I feel the market will likely remain flat for a while, or perhaps just oscillate within a narrow range. So I’m not so anxious anymore.”

“Within two or three years, if I come across the right opportunity, I can just buy. No need to rush for now.”