Record new housing supply gives market strong start of the year

Shanghai's new and pre-occupied housing markets registered mixed performances in the first month of 2022, with single-month supply of new homes exceeding 15,000 units, a record for the city.

New home sales, excluding government-subsidized affordable housing, rose 38 percent from December to 11,519 units in January, according to latest data released by Shanghai Homelink Real Estate Agency. On a year-on-year basis, that represented a mild decline of 5 percent.

By value, these new homes cost a total of 79.9 billion yuan (US$12.6 billion), a month-on-month rise of 49 percent and a year-on-year drop of 6 percent, Homelink data showed.

"The new housing market was off to a strong start, despite the Spring Festival holiday which fell on the end of the month," said Yang Yulei, a senior analyst with Homelink.

"It was mainly fuelled by the record new supply which saw some 47 developments introduce 15,638 homes in total to the local market, an increase of 59 percent from December and a surge of 97 percent from the same period a year ago."

By proximity to the city center, 80 percent of the new supply is located in suburban areas beyond the Outer Ring Road and 8 percent sits within the Inner Ring Road.

As for the existing housing market, momentum among buyers remained stable in January with some 15,000 pre-used homes changing hands around the city, a month-on-month drop of 16 percent.

In terms of value, this represents existing homes worth 48.1 billion yuan, down 16 percent from December. On average, existing homes sold for 3.18 million yuan per unit, unchanged from the previous month.

Outlying areas continued to be the most popular among home seekers with Nanqiao in Fengxian District, Zhoukang in the Pudong New Area, and the core area of Jiading District being the top three choices last month, with sales of 410, 373 and 326 homes, respectively, according to Homelink.

"Overall sentiment in the existing market remained stable despite the retreat in transactions, which was somewhat impacted by the holiday," Yang said. "On the price side, both average cost of pre-occupied homes and per unit price remained little changed from December, a proof of stability as well."