Existing home market regains strength despite hot weather

Buyer momentum for existing homes improved further in Shanghai in July, despite the scorching weather as the market continued to regain strength after a two-month COVID-19 lockdown, which had put home seekers on the sideline.

More than 20,000 lived-in homes, valued at around 65.9 billion yuan (US$9.73 billion) in total, changed hands across the city last month, a month-over-month jump of 28 percent and 37 percent, respectively, according to latest data from Shanghai Homelink Real Estate Agency Co.

"Sentiment among home seekers continued to recover from June when some of them were naturally taking a wait-and-see approach," said Yang Yulei, a senior analyst with Homelink. "The recovery was within our expectation and we do expect such momentum to extend over the next couple of months."

By price, the average cost of an existing home stood at 3.28 million yuan in July, an increase of 7 percent from June.

Citywide, Nanqiao in suburban Fengxian District, the core area of suburban Jiading District and Zhoukang in the Pudong New Area were the most sought-after areas among home buyers while Jinshan New Town in suburban Jinshan District and Huinan in Pudong seemed popular options as well, Homelink data showed.

"The performance in July, which is a traditional low season for property sales, was pretty good if we take the scorching weather into consideration," said Lu Wenxi, a senior researcher at Shanghai Centaline Property Consultants Co.

"Standing above the 20,000-unit threshold could indicate the prevalence of rather strong momentum which hopefully would further boost confidence among potential buyers in the next few months."

For the first seven months of 2022, some 77,000 units of lived-in homes valued at 242.6 billion yuan were sold around the city, a decrease of 62 percent and 64 percent, respectively, from the same period a year ago. That improved from a drop of 68 percent and 71 percent registered in the first half.

On average, existing homes sold for 3.16 million yuan per unit during the January-July period, down 6 percent annually.

Notably, the proportion of buyers with tight budgets increased in the first seven months, with deals worth less than 2 million yuan accounting for 35.4 percent of the total, up 6.8 percentage points year on year, according to Homelink data.