Recently overtaking Hong Kong as the planet's most expensive city, Shanghai is exorbitant when it comes to buying or renting a home, with sales prices in the centre comfortably outpacing global hotspots like London and New York. From luxurious mansions and opulent apartments to impoverished dwellings, discover the extremes less affluent residents are willing to endure in order to keep a roof over their heads. Click through the gallery to get the lowdown on Shanghai's sizzling housing market as demand reaches fever pitch...

According to Xitai Data, which compiles real-time property sales figures across China, the average price per square foot of residential real estate in Shanghai comes in at a hefty $950 (£691), rising to $1,820 (£1.3k) in Huangpu, the city's most expensive area, which is dearer than some of the most upscale parts of London, New York, Paris, San Francisco and Geneva.

With real estate prices stubbornly high, buying a property is out of reach for Shanghai's poorest residents. And though most of the city's denizens are homeowners, many are weighed down by huge mortgages: a typical pre-owned two-bedroom apartment can cost in excess of $1.5 million (£1.1m), while the average monthly salary in the city is only around $1,700 (£1.2k) and the minimum wage stands at a paltry $374 (£270) per month.

House prices in Shanghai increased every month between December 2019 and May 2021, and following a brief dip earlier this year, are on the up once again. Their seemingly unstoppable rise is a major concern for the powers that be, who fear a monster bubble is developing and hindering hard-up potential first-home buyers desperate to get on the property ladder.

Chinese citizens have relatively few options when it comes to investing their hard-earned cash, with real estate being the number one choice, accounting for 70% of household wealth in the country. Putting money into bricks and mortar is also seen by many as the safest investment, so it's hardly surprising the home-buying frenzy in Shanghai is showing no real signs of slowing down.

Buying a home in Shanghai is actually much more expensive than merely renting it. The price-to-rent ratio is super-high in the city, almost triple that of New York, which means owning a property is a far less cost-effective option than renting it. Plus, ominously, a high price-to-rent ratio is a housing bubble red flag, and can signal a crash is on the horizon.

While the vast majority of Shanghai residents are homeowners, renters of course get the better deal. Unlike property purchase prices, rents are cheaper in the city compared to London and New York. The monthly cost to lease a three-bedroom apartment is typically $3,125 (£2.3k) in the centre, dropping to $1,509 (£1.1k) on the outskirts, while a one-bedroom apartment averages $1,300 (£943) per month in the centre and $675 (£490) in the suburbs.

Fuelled by mass migration from rural parts of China, Shanghai's population has almost doubled in the past two decades, up from 14.8 million in 2001 to 27.8 million today, despite efforts to cap the number at 25 million. To meet this massively increased demand for housing and infrastructure, much of the city has been transformed over the last 20 or so years.

From the 1990s onwards, thousands of land parcels were released to the government for redevelopment, prompting a major overhaul of Shanghai. Swathes of the city were bulldozed, with many traditional homes and other old buildings replaced by gleaming high rises, with the once-sleepy Pudong neighbourhood, which is now home to the city's financial district and its tallest towers, undergoing the most dramatic transformation.

This fast-tracked gentrification has come at a price, however. Tens of thousands of families have been displaced, breaking up close-knit communities, while house prices have risen to unsustainable levels and the makeover has resulted in the destruction of much of the historical fabric of the city. There has, however, been a stronger emphasis on heritage conservation in more recent years.

The redevelopment drive also spawned the 'nail house' phenomenon, when residents steadfastly refuse to sell developers their property (which has usually been undervalued), staying put while neighbouring homes are razed and the new development takes shape around the old house. A main road was even constructed around one notable holdout in Shanghai, which blocked traffic for 14 years before it was demolished by the authorities.

Housing stock in Shanghai is, for the most part, made up of modern high-rise apartments and contemporary duplexes and townhouses, along with the historic lilong ('lane') houses, and grand old garden houses and villas that escaped the wrecking ball during the city's extensive revamp.

The most desirable and expensive locations to buy or rent include Huangpu in the city centre, which boasts the historic Bund waterfront and shares the former French Concession and its leafy boulevards and sprawling mansions with neighbouring Xuhui. Across the Huangpu River there's ultra-modern Pudong, and further out is the posh inner suburb of Gubei.

Among the other classy districts are Hongkou, a fascinating blend of old and new, and Changning, which is mainly upmarket residential but features attractions such as Shanghai Zoo. The city is also home to five themed new towns that mimic iconic destinations in Europe: Thames Town (UK), Pujiang (Italy), Anting (Germany), Gaoqiao (the Netherlands) and Luodian Town (Sweden).

As is the case with other global real estate hotspots, property in Shanghai is more affordable the further away it is from the city centre. According to Xitai Data, Jinshan (pictured), an outer suburb in the southwest of the city, is the cheapest place to buy, with the average price per square foot just $281 (£204). Other budget-friendly neighbourhoods, all of which are on the outskirts, include Chongming and Fengxian.

The record price per square foot in the city and mainland China to boot is an astronomical $4,930 (£3.6k) for a $38.6 million (£28m) villa in the stunning Suhe Creek development by Fosters+Partners. Previously, the record was held by a nearby 7,553-square-foot townhouse at 11 Suhewan, which sold in 2016 for $36.1 million (£26.2m) or $4,780 (£3.5k) per square foot.

The high prices do little to dampen demand for property at the luxury end, which has been “on fire” in 2021, according to the South China Morning Post. In fact, the top tier of Shanghai's housing market grew 16% in the first quarter of this year, according to Knight Frank, eclipsing growth in Hong Kong, New York, London and Dubai.

With competition for the most sought-after homes so fierce, agents can get away with being as choosy as they like - and some even require prospective buyers to show evidence of their wealth just to view the swishest properties. To tour the aforementioned Suhe Creek villa, for instance, house-hunters had to show the developer a bank certificate proving they had more than $7.7 million (£5.6m) in liquid assets.

At the top end of the market, this 6,652-square-foot triplex, which is located in the glamorous Chateau Pinnacle Tower in the heart of the former French Concession, is listed for $16.2 million (£11.8m), so $2,435 (£1.8m) per square foot. The deluxe pad features five bedrooms and the same number of bathrooms, a galleried living area, slick kitchen and fabulous roof terrace.

Made up of two lofty skyscrapers on the riverfront in Pudong, Tomson Riviera is one of Shanghai's most exclusive developments. As you can imagine, rental prices here are eyewatering with the lease for this 6,458-square-foot four-bedroom, four-bathroom apartment costing a painful $30,800 (£22.4k) per month.

In the more mid-range of the market, the typical price you can expect to pay for a decent two-bedroom home in one of the nicer, more central areas of Shanghai is still a stiff $1.5 million (£1.1m). This fairly ordinary three-bedroom, two-bathroom apartment in Hongqiao, which is part of Changning, is on the market for $1.9 million (£1.4m). That said, it does have a garden, a major bonus for any property in the city.

The average monthly rental cost of a three-bedroom apartment in the city centre is $3,125 (£2.3k). For around that sum, you can get this attractive three-bedroom, three-bathroom condo in a portered building in Huangpu, but there are even more affordable properties in Hongqiao, with a cosy three-bedroom, one-bathroom listed for a pretty reasonable $1,600 (£1.2k) a month.

Given the cost of property in Shanghai, micro apartments and coliving spaces have taken off big-time in the city, with designers vying with each other to come up with ever more ingenious designs that maximise the tiny amount of space available. One of the most interesting concepts is carmaker BMW's MINI LIVING project, a converted paint factory consisting of micro apartments, shared living spaces and an array of communal amenities, including a cinema and rooftop farm.

Yet even these cleverly designed micro apartments and coliving spaces are too pricey for many of Shanghai's financially squeezed residents. Taking the average monthly wage of $1,700 (£1.2k) as guide and the principal that housing should eat up a maximum of 30% of that wage, the typical person has just $510 (£370) per month to spend on mortgage payments or rent.

That sort of wage is unlikely to stretch to even a studio in the centre, hence why many buyers turn to family for handouts and informal loans, team up with others to buy a property or burden themselves with enormous mortgages. Or they settle for a cramped rental room like this one in Zhongshan Park, Changning. The monthly cost is only $509 (£370) but the tenant has to share the bathroom, kitchen and living room.

Migrants from other parts of China and abroad are particularly disadvantaged when it comes to securing a decent home in Shanghai, due to the hukou housing registration system. The system requires citizens to be registered at birth in their home village, town or city, and comes with a myriad of benefits, including access to social housing and the ability to get a mortgage.

The catch is these benefits are restricted to the area the individual is registered, therefore residents who weren't born in Shanghai aren't entitled to its hukou perks. The system has been relaxed in recent years, but it's still far from easy to obtain a Shanghai hukou and only migrants who have lived and worked in the city for five to seven years, 'talented' individuals, gifted Chinese grads returning from study abroad and wealthy outsiders who have invested heavily in the city are even considered.

With the odds stacked against them, many low-income migrants have to relinquish their privacy and resort to extreme sharing: leasing a bed in a room with several others, usually in a dangerously overcrowded apartment, which can cost as little as $100 (£73) a month. These illegal properties tend to be sublets and often the ultimate owner has no idea their property is being rented out in this way.

In 2019, researchers from the University of California found two or three-bedroom properties crammed with a dozen or more migrants commonplace and revealed that one three-bedroom home was housing 24 on bunk beds, with some even sleeping in the kitchen. More shockingly, 39 tenants were discovered in June living in a 969-square-foot three-bedroom apartment in Pudong.

These illegal properties pose a serious fire risk. In 2017, a devastating inferno ripped through a housing block in Beijing packed with tiny subdivided units, killing 19 residents and injuring eight, while last year overloaded power sockets in an over-occupied Changsa high-rise sparked a major blaze. Thankfully, this fire resulted in no casualties.

In a bid to rein in the out of control subletting market, the authorities are cracking down on illegal shared homes, raiding and taking out suspect properties and even going as far as to delete ads for shared rooms on listings sites and censor terms such as 'bed space'. But these dormitory apartments still exist across the city, despite the government's efforts to stamp them out.

Homelessness is a problem in Shanghai too, albeit a hidden one as it's unusual to see rough sleepers in the city, but one rescue station deals with 1,000 homeless people a year. Shelters were introduced in 2010, though the official policy is to return migrants without a home to their place of origin, with the authorities using everything from facial recognition tech to DNA testing to identify and monitor them.

As well as clamping down on overcrowded sublets, the authorities have brought in a slew of measures aimed at cooling down the overheated housing market in the city. And the people who run Shanghai are going all out, especially since President Xi has stressed several times of late that houses “are for living in, not for speculation.”

The measures include imposing a larger minimum downpayment for second-home buyers, upping the eligibility threshold for non-locals to purchase a home, verifying listings for pre-owned properties to prevent estate agents from “disturbing the market” and tightening up mortgage lending rules. The city has also started implementing a score-based lottery system for housing sales.

On top of that, the authorities have closed a loophole that let newly divorced people up their quota for housing and mortgages and led to a wave of fake marital splits in the city. Prior to the crackdown, married couples would divorce temporarily, enabling them to invest in more property and become eligible for additional mortgages. They would then remarry once the deals had been done.

Of course, the most obvious solution to a housing shortage crisis and rampant overcrowding is to build, build, build, and the Shanghai authorities are rising to the challenge with aplomb. The local government recently announced it would construct 220,000 rental homes over the next five years, an increase of 45% from the previous half-decade.

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