Are high-end new properties in Shanghai being siphoned off by old, run-down large second-hand homes?

Since 2026, the real estate market in Shanghai has been continuously recovering. In May, the transaction area of new homes increased for three consecutive months on a month-on-month basis, and the transaction area of second-hand homes increased for three consecutive months on a year-on-year basis, with the growth rate expanding.

Against the background of the overall market stabilizing, the transactions of first-hand and second-hand homes worth tens of millions have shown an anti-intuitive trend.

In the past, new homes were the absolute mainstream in Shanghai's high-end improvement market worth tens of millions. However, in recent years, the transactions of new homes in this price range have been continuously declining.

On the other hand, the transactions of second-hand "old, shabby and large" homes worth tens of millions, which were not favored by improvement-oriented customers in the past, have been rising sharply.

Shanghai's high-end new homes are being diverted by second-hand "old, shabby and large" homes.

01

Since March, the popularity of Shanghai's high-end residential market has fallen short of expectations. The off - take rates of most projects at the opening are concentrated between 20% - 50%, and the off - take rates of some projects are only 5% - 9%.

In terms of transactions, only 3,592 high-end residential units worth over ten million were sold in the first five months of 2026, a year-on-year decrease of 39%. Since 2022, the transactions of new homes worth tens of millions have been continuously declining.

Is the shrinkage of high-end new home transactions due to a lack of supply in the market? On the contrary, the fact is just the opposite.

Data shows that new homes worth tens of millions in Shanghai officially entered the stage of oversupply in 2024. The overall supply - demand ratio in the past three years has been stable at around 1.1. Among them, for the price range of 10 - 20 million, which is the main force in the market, the supply - demand ratio in the first five months of this year directly soared to 1.23.

Currently, the biggest bottleneck for new homes worth tens of millions in Shanghai is the weakening demand year by year.

In terms of the year-on-year changes in the supply and demand of new homes, in 2024, the supply of new homes worth tens of millions increased by 11.4% year-on-year, while the transactions decreased by 14.4%. In 2026, the divergence between supply and demand further intensified. In the first five months, the supply of new homes decreased by 20.9%, but the transactions decreased by 39% year-on-year.

02

Corresponding to the continuous decline in the transactions of new homes worth tens of millions, the transactions of second-hand homes in this price range have been increasing year by year.

2022 was a critical node. At that time, the number of transactions of new homes worth tens of millions reached a phased high, with 16,699 units sold, and then began to decline.

On the contrary, for second-hand homes, after falling to a phased low of 5,598 units in 2022, the number of transactions increased year by year. By 2025, 9,390 units were sold, setting a new high over the years.

The core reason is that the price gap between new homes and second-hand homes has gradually widened.

Judging from the average transaction price, the average transaction price of new homes has been gradually rising since 2021 and reached a record high in 2025. The average transaction price of second-hand homes dropped significantly after reaching a phased high in 2023, and the decline widened in the first five months of 2026, with the price dropping at an accelerated pace.

Breaking it down into different price ranges, the price gap between first-hand and second-hand homes is even more obvious: The average transaction price of new homes in the price range of 10 - 20 million has been significantly higher than that of similar second-hand homes by 30% - 50% for a long time.

Judging from the changes in the average transaction price, second-hand homes are very cost-effective.

Taking the average price of second-hand homes in January 2021 as the benchmark, the average price of second-hand homes worth 10 - 20 million briefly rebounded from the fourth quarter of 2024 to the first quarter of 2025, and then began to decline at an accelerated pace. During the same period, the price of new homes increased by 18%.

If we focus on specific projects, the "perceived" price gap between the two is even more obvious. Comparing the top 5 communities in terms of the number of second-hand transactions in the first five months of 2026, the maximum price difference per square meter between their average transaction price and the average sales price of new homes on sale within a 2 - 3 kilometer radius is 106,000 yuan.

The reason why new homes worth tens of millions are being diverted by second-hand "old, shabby and large" homes is not only the price. Another important reason is that some new home products do not have a "generational" lead.

Except for a very small number of projects with extremely scarce locations that are not comparable, some high-end new homes do not have very prominent product advantages, let alone price advantages. It is inevitable that homebuyers will be diverted.

In the future, if the high-end market wants to regain market share, it needs to start with product creation and service to build an unshakable "moat".

This article is from the WeChat official account "Ding Zuyu's Comments on the Real Estate Market". Author: Puri Research, Editorial Department. Republished by 36Kr with permission.