China's luxury home sales rise, but broader property sector remains weak

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.

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.