Core Viewpoint - The Shanghai real estate market showed initial signs of recovery in early 2025, but the momentum quickly faded, leading to a significant decline in transaction volumes and an increase in listings, indicating a challenging market environment [1][2][3]. Market Performance - In March 2025, Shanghai's second-hand housing transaction volume reached 21,300 units, surpassing the critical threshold of 20,000 units, but over 60% of these transactions involved sellers reducing prices by more than 15% or properties priced between 3 million to 5 million [1]. - By April 2025, transaction volumes dropped to 18,100 units, and further declined to 17,500 units in May, stabilizing around 16,000 units during the summer [2]. - As of early August 2025, the number of second-hand listings in Shanghai exceeded 200,000, a significant increase from less than 100,000 two years prior [3][4]. Price Trends - The average transaction period for second-hand homes extended from 180 days last year to 245 days this year, indicating a growing fear among sellers regarding the time it takes to sell properties [4]. - The average negotiation space for second-hand homes increased from 5.2% to 9.8%, yet buyers remain hesitant to make purchases [6]. - In the second quarter, housing prices outside the inner ring fell by 2.1%, while prices within the inner ring decreased by 0.6%, reflecting a downward trend in property values [6]. Luxury Market Dynamics - Despite the overall market decline, luxury properties priced above 30 million yuan saw a slight increase in transactions by 5% in the first half of 2025, indicating that high-end real estate remains a stable investment [4]. - Notable price reductions were observed in luxury properties, with some listings experiencing significant markdowns, such as a property that sold for 61 million yuan after being listed at 120 million yuan [4]. Rental Market Insights - The average rental price in Shanghai fell by 4.5% year-on-year in July 2025, with some long-term rental apartments offering incentives such as two months free rent for a one-year lease [7]. - The rental yield of 1.8% is not competitive compared to government bonds, raising questions about the viability of investing in rental properties [8].