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Home sales rebound may drop away

THE financial rebounding of second-hand home buyers in the city will probably drop over the coming months as recent rent increases by some landlords are dragging down transactions, particularly in the mid to low-end sector, industry sources said today.

"Transaction volume of used apartments near the Middle and Outer Ring roads fell about 10 percent recently compared to the same period a month earlier," said Wu Tianhao, a district director at Shanghai Centaline Property Consultants Ltd, which runs about 150 real estate brokerages across the city. "Many landlords began to raise their prices amid recuperating market demand."

Centaline statistics showed that the transaction volume of second-hand homes soared 138.6 percent in February from a month earlier to 98,730 square meters. The rally was mainly due to robust demand by end-users after boosting policies from both the central and local government helped reduce home buying costs.

During the same period, the average price retreated 5.9 percent to 13,727 yuan (US$2,009) per square meter from January, indicating that many deals were concluded in suburban districts.

The recent withdrawal of home sales came after an imbalance between supply and demand. At the moment, a good quality apartment can usually attract three or more house hunters and therefore rent increases by landlords have become frequent. But this could hurt future transactions as the market is still far from a major recovery amid a slowdown of the domestic economy as well as the worsening global financial turmoil, the industry sources said.

However, the high-end sector, which costs at least 25,000 yuan per square meter, remained stable with minor price increases being found in some areas.

"The high-end housing market didn't recover as quickly as the mid to low-end homes as end users, who usually don't look for luxury apartments, have been the driving force behind last month's rally," said Huang Hetao, a researcher at Century 21 China Real Estate. "No major price changes have been found in downtown areas such as north Luwan, south Huangpu and Xujiahui though Gubei witnessed some insignificant increases."

Century 21 said the transaction volume of second-hand homes doubled in the first three and a half months compared to the same period a year earlier and high-end apartments were sold at an average 10 to 16 percent cheaper year-on-year in different areas of the city.


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