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In 2023, the average price of residential housing sold in Shanghai, the most important economic hub of China, reaching * yuan per square meter, making the city one of the least affordable cities in the country. 

The housing market boom

Since the housing reform in the 1990s, the prices of homes in Shanghai have increased almost every year, thanks to the growth of the city’s population and, thus, the high demands in the housing market. The high property prices gradually became out of reach for most residents, who earn an annual per capita income of only ** yuan in 2023. Residential properties in the city center were especially unaffordable, as newly built homes located within Shanghai's inner ring road had an average price of ** yuan in 2023, **** more expensive than their counterparts outside the outer ring road.

Risks and interventions

The high price not only made living in the city expensive for its residents, but also posed a grave risk to China’s financial system. In the first 20 years of this century, the total value of personal housing mortgage loans in Shanghai increased by ***, and defaults of any moderate scale can be consequential. Therefore, both the central and the municipal authorities had been attempting to curb the continuous rise of property costs in Shanghai, through the increase in the supply of housing stocks and policies limiting speculations in the market. However, most measures were not as effective as anticipated.