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New home demand remains firm

DEMAND for new houses in Shanghai continued to be robust last week, with the volume of area sold across the city hitting an 86-week high, but observers wonder if the growth can be sustained.

A total of 560,800 square meters of new homes, excluding those built for relocated residents, were sold in the city between May 18 and May 24, an increase of 15 percent from a week earlier, according to statistics released yesterday by E-House (China) Holdings Ltd.

"While new home transactions remained active over the past months, there has been actually growing concerns among industry players over whether the sales boom is sustainable," said Xue Jianxiong, an E-House analyst.

Sales of new homes in Shanghai have been rising after the Spring Festival, with 787,600 square meters in February, 1.5 million square meters in March and 1.89 million square meters in April changing hands. By Sunday, May had seen sales exceeding 1.61 million square meters, according to research by Shanghai Uwin Real Estate Information Services Co.

"The volume of new home sales could possibly hit 2 million square meters this month if the strong sentiment can be maintained over the remaining days," said Lu Qilin, a researcher at Shanghai Uwin. "And the robust buying demand would likely continue through June as the second quarter of the year has been usually the traditional peak season for home sales in Shanghai since 2005."

Home sales usually fall in the summer due to the hot weather in July and August.


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