China's Rich Spend Millions on Shanghai Homes

It seems like Shanghai is still that bright spot in the real estate industry. But why do you think the luxury sector, particular in the city, is booming? Well, the rest of the market is still stuck in this deep slump. Morning, Yvonne. Yeah, it's quite surprising really. This boom in Shanghai is being driven by rich Chinese people who live in the area, who live in surrounding areas of Shanghai. Remember, this is China's premier financial hub. So there's always been a scarcity of luxury housing in that area. And what we've seen recently is some of those these luxury homes have come onto the market and there's been so much pent up demand that people have rushed in to purchase these homes. They've also got a sense that some of these homes are being put on at a relatively competitive price. So they're sort of seeing bargains out there as well. And this is all against the backdrop of property easing as well in Shanghai and other cities. So Shanghai has been lowering down payment requirements and easing other restrictions. So that's also been a bit of a tailwind for people in the luxury end of the market who who, who want to get in. So, you know, it really is an outlier. But but yeah, that's quite surprising. You know, luxury homes are are in vogue in in Shanghai. Yep. So that's the Russell, that's the why. What's the what's the what? I mean, just give us a sense of prices in this segment. How are they trending? How are they likely to trend against really the rest to your point, the rest of the country where prices are really falling at the fastest pace in years. That's right, David. I mean, you have to bear in mind that Shanghai, the overall price market in in Shanghai is relatively solid. Prices aren't falling there. You know, prices are falling and overall around the country, but Shanghai has been one of the least weak markets in general. And then you look at the luxury end of that, prices have actually been soaring. They've risen that 18% in the past year. So you know, that's partly due to authorities lifting a cap that that was on prices of new homes that was put in during the bubble years. So that's gone. And, and there's also a sense among home buyers that prices of existing properties are even higher. So people are going in there buying the new homes, knowing or feeling that that the property they're buying is going to retain its value. Existing homes in the same neighbourhoods are worth more than that. And so they're, they're going in and buying these properties and sort of having the, the, I guess, the same sort of mentality that most Chinese home buyers had until this recent slump, which was that you can buy a home and rest assured that it's going to retain its value and it'll be a good store or investment. Unfortunately, we can't really say that for the rest of the market. Home prices have been falling rapidly. And despite the stimulus that's come in, you know, that's really put a down dampener on home buyer sentiment. And people are questioning, you know, whether buying a home is a good investment. And the luxury market in Shanghai, it's a different story.