Transaction volumes of both new and second-hand homes shrunk significantly in the city over the past month, statistics from major real estate agencies show.
"October is the fourth consecutive month that witnessed a drop in transaction volume of new houses," said Xue Jianxiong, head of research at Shanghai Youwin Real Estate Information Service Co Ltd. "A somewhat overdrawn purchasing power in the first half of this year, the recently announced new mortgage policy as well as an insufficient market supply might jointly contribute to the decrease."
A total of 1.62 million square meters of new residential properties were sold in the city between October 1 and October 30, a decrease of 22 percent from September, according to Youwin.
That was less than half that sold in the peak June period, with a total of 3.5 million square meters in new houses.
The People's Bank of China and China Banking Regulatory Commission announced on September 27 that mortgage holders who apply for a second home loan must produce a down payment of at least 40 percent and pay a 10-percent premium on their interest rate. Many potential home buyers were waiting to see details of the policy, industry insiders said.
Meanwhile, statistics from leading real estate agency Centaline showed sales of used apartments fell by about 30 percent in the city in October, a drop of 50 percent from same period a year earlier.
Earlier media reports said the local supply of new residential properties dropped below six million square meters on October 9, a historic low since the second half of 2005, citing the official Shanghai Real Estate Trading Center Website.
Only about 5.76 million square meters of new houses were available for sale then. Experts say a supply of some 10 million square meters is regarded as normal.
However, the average housing price for new homes seemed to maintain an upward trend last month, mainly because more high-end apartments and villas - usually priced at more than 30,000 yuan per square meter - were sold during the period.
According to Youwin, new houses were sold at an average 11,577 yuan (US$1,543) per square meter in October, an increase of 10.18 percent from a month ago.
(Shanghai Daily November 1, 2007)