China’s Tech Boom Fuels a Luxury Housing Revival

Sales of luxury homes in mainland China’s top cities are picking up as high-net-worth individuals, benefiting from the country’s tech boom, splash out billions of yuan to improve their housing.

The buying binge has sparked expectations of a broad market recovery after a six-year property slump across the country, according to brokers.

But analysts said such homes represented just a small portion of the mainland’s property industry, with increasing sales and higher prices not enough to turn the overall real estate sector around. “Most middle- and low-income people are still taking a cautious stance on homebuying,” said You Liangzhou, the owner of the Baonuo property agency in Shanghai. “It is too early to conclude that a full-scale recovery has taken shape.” China’s real estate sector and related industries, such as home appliances and construction materials, account for about a quarter of its economic output.

Limits on developers’ ability to borrow money that were introduced in mid-2020 led to a property crisis. A wave of defaults by the mainland’s largest developers, such as China Evergrande Group, since 2021 has been a major stumbling block to growth of the world’s second-biggest economy.

Brokers said the fanfare surrounding expensive homes would be short-lived due to a shaky economy and investors’ worries about their wage income.

“Any positive news about the property sector could lead to speculation that the market will soon bottom out,” said Yan Zhancai, a Shanghai-based sales consultant at property agency Lianjia. “But buoyant transactions of only high-priced flats might not be enough to kick off a new round of price surges across the property market.” Data from Purui Digital Intelligence Technology, a real estate consultancy and data analytics firm, shows 18,000 new residential units each worth at least 10 million yuan (US$1.48 million) found buyers in 35 major Chinese cities in the first half of this year, down 13 per cent from a year ago.

But 1,636 newly built homes priced between 30 million yuan and 50 million yuan were sold in the same period, up 38 per cent from the first half of last year.