Transactions of new residential properties in Shanghai have dropped for the fourth consecutive month since October as more local home buyers are taking a wait-and-see attitude.
"A total of between 850,000 and 900,000 square meters of new houses, excluding those designated for relocation uses, are supposed to be sold in January, which is a decrease of more than 15 percent compared to some 1.07 million square meters in December," said Xue Jianxiong, head of research at Shanghai Youwin Real Estate Information Services Co.
"The coming February will probably continue to see the downward trend as the Lunar New Year holiday is the traditional low season for home purchases."
According to official statistics, transactions of new houses reached more than two million square meters between May and September last year and then fell to 1.64 million, 1.4 million and 1.07 million square meters in the last quarter of 2007.
"The coming April and May could be very critical as the performance of the two months might set the tone for the whole year," Xue added. "If volumes begin to pick up, then the market can still expect some strong sentiment in 2008."
A recent policy announcement by the People's Bank of China and the China Banking Regulatory Commission to tighten conditions on second mortgages, which was aimed at speculative buyers, has curbed demand, industry people said.
As a result, some developers even began to cut prices this month to lure buyers - a rare move in the past two years.
For instance, a project in Sanlin, Pudong New Area, was launched at an average price of 13,000 yuan per square meter on January 19. Not long ago, two neighboring projects were still sold at 18,000 yuan and between 14,000 and 15,000 yuan per square meter.
Meanwhile, in Puxi, the second phase of a project on Baiyu Road in Putuo District was launched at an average price of 21,000 yuan per square meter on January 4, some 7,000 yuan cheaper than a project launched earlier.
However, it seems that more home buyers prefer to wait longer.
"I would rather postpone my home purchase plan for several months at least," said Rain Yu, a 31-year-old telecommunications engineer who plans to have his wedding ceremony next year.
(Shanghai Daily January 31, 2008)