Shanghai Mirrors Beijing in Easing Housing Purchase Rules for Outskirts

Shanghai has implemented significant reforms to its property purchase restrictions in its outer districts as part of an effort to stimulate weak housing demand and address the oversupply of unsold homes, following similar recent moves by Beijing [para. 1]. The policy, announced by six city government departments, enables eligible households, defined as those with local registration or non-locals who have paid social insurance or income tax in Shanghai for at least a year, to purchase an unlimited number of new and secondhand homes outside the city’s Outer Ring Road. Previously, there were strict purchase caps regardless of location, and single adults are now recognized as households under the new rules [para. 2][para. 3].

Inside the Outer Ring, restrictions remain: local households and singles are limited to two homes, while qualified nonlocals face no restrictions outside the ring [para. 4]. The policy’s focus is on non-core suburban districts, where the majority of oversupply exists. New houses outside the Outer Ring now account for 70% of the city’s total stock, with destocking taking over 20 months; nearly 40% of secondhand listings are also in these areas. This excess has intensified competition between new builds and resale markets, causing prices in some communities to return to 2016 levels [para. 5][para. 6].

Although Shanghai has led first-tier Chinese cities in new and resale home transactions, recent months have seen a decline in activity: secondhand housing deals dropped more than 33% from March to July, while new-home sales fell by 25.6%, according to China Real Estate Information Corp. (CRIC) [para. 7]. Analysts suggest the new policy could revive demand, echoing the impact of recent relaxations in Beijing. The potential exists for increased activity, especially in outer districts such as Jiading and Songjiang, by making home-buying easier for both upgraders and first-time buyers, though there are concerns that this could shift demand away from smaller cities [para. 8].

Historically, Shanghai maintained some of China’s harshest property purchase curbs, particularly for nonlocal buyers. Before, nonlocals needed five straight years of local taxes or social insurance contributions to qualify for purchases, and single nonlocals were excluded entirely from restricted zones [para. 9]. The ongoing national housing market slowdown, which began in late 2021, has forced policymakers to reassess restrictions. Initial cautious steps gave way to targeted relaxation from January 2024, when Shanghai began easing access for nonlocal singles, followed by further broadening in May and September [para. 10][para. 11].

While these adjustments briefly boosted market sentiment and transaction volume in late 2024 and early 2025, momentum waned by mid-year. Official data showed new-home prices rising at a decelerated rate from May to July, and secondhand prices falling for three months, with a 0.9% monthly decline [para. 12]. Following calls from Premier Li Qiang for stronger housing market stabilization, Beijing became the first city to allow unlimited purchases by qualified buyers outside its Fifth Ring Road [para. 13].

Analysts view Shanghai’s measures as a means of reducing excess inventory, given that most new supply is in the outer suburbs [para. 14]. The reforms were accompanied by mortgage policy changes, including the elimination of distinction between first and second-home loans and the introduction of variable rates based on borrower risk, expected to stimulate demand for upgrade purchases [para. 15][para. 16]. Public housing fund loan limits were raised, and other tax and down-payment policies were refined, making Shanghai’s measures both broader and more robust than Beijing’s [para. 17].

Industry experts anticipate the combined effect of these policies to boost both new and resale activity in the outer districts, particularly as the traditional high season—“golden September, silver October”—approaches [para. 18].