Second-hand home sales surpassed those of new homes by floor space last year for the first time since private property markets emerged in the 1990s, according to data from the China Real Estate Information Corporation.

“There’s a huge amount of secondary stock out there that’s been held by investors that’s clearly coming back to the market,” Mr Lawrence said.

A Financial Times analysis of CRIC data across 14 major cities for which figures are available, including Beijing, Shenzhen and Nanjing, shows that in 11 of them, second-hand sales volumes were above new home sales in March by floor space.

In the same cities in 2021, sales of new builds were running at almost twice the volume of previously owned homes. The gap between second-hand purchases and those for new homes widened even more in March, the FT analysis shows.

In a sign of the property market’s precarious state, sales of new builds, which represent the basis for core national statistics on the market, are falling sharply. In the first quarter, property sales by floor area fell 19.4 per cent, according to the National Bureau of Statistics.

While local governments approve a price range for new builds – in effect setting a floor in a collapsing market – prices for second-hand property are more open to negotiation.

In March, second-hand home prices in China’s 70 biggest cities fell 5.9 per cent year-on-year, the most since records began in 2005. In the same month, prices of new homes for the same group of cities fell 2.7 per cent.

Sign of bigger changes ahead

In bigger cities such as Beijing, Shanghai, Guangzhou and Shenzhen, where second-hand markets are more established, second-hand prices in February fell 6.3 per cent – the biggest drop since records began in 2011.

“As more people are looking to sell their flats, with more second-hand flats in the market, there is more flexibility for negotiation,” said Andy Lee, chief executive for mainland China at Hong Kong-based broker Centaline.


One recent buyer in Shanghai, who asked to remain anonymous, said he bought a second-hand home because prices had fallen “to a level where I can afford it” and because of mortgage incentives offered by the local government to boost the property market.

More broadly, greater demand for second-hand homes signals bigger changes afoot in the market. The so-called presales model – in which buyers pay for property before construction – helped fuel rapid urbanisation, said Ms Zeng at CreditSights.

“I don’t actually think more housing is needed,” she said. “I think the government has realised this problem. That’s why they don’t mind a third of developers are gone in terms of debt servicing.”

In Shanghai, a visitor to the art deco building said many people in China still had the mindset of “I need to buy my new home”.

But second-hand homes have multiple advantages. Not only have they been completed, but they are also close to services. Some new developments have been thrown up in the hope of services ultimately emerging.

The visitor recalled one friend who bought a house a decade ago because she “firmly believed” line 13 of Shanghai’s subway system would extend to her doorstep, which it eventually did.

“People are probably not as hopeful for that any more,” the visitor said. “People want to buy things they can see.”

Financial Times