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Luxury home sales pick up in China’s top cities, analysts warn

Analysts say the upturn in high-end demand is too small to offset the broader slump tied to developer borrowing limits introduced in mid-2020.

Reported · Written up by our desk · Residential

Sales of luxury homes in mainland China’s top cities have picked up as high-net-worth buyers spend on housing upgrades, with brokers expecting the stronger demand to support a wider recovery after a six-year property slump, according to SCMP Economy.

But analysts cautioned that luxury properties make up a small share of the broader mainland market, and that higher prices and increasing transactions are not enough to turn the overall real estate sector around. You Liangzhou, owner of the Baonuo property agency in Shanghai, said it is still too early to conclude a full-scale recovery has taken shape, noting that most middle- and low-income buyers remain cautious.

SCMP Economy also pointed to the macro impact of the sector, saying China’s real estate and related industries, including home appliances and construction materials, account for about a quarter of economic output. It linked the downturn to limits on developers’ ability to borrow introduced in mid-2020, and to a wave of defaults among major developers such as China Evergrande Group that began in 2021.

The article said the resulting property crisis has remained a key stumbling block for growth in China, the world’s second-biggest economy.

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