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Price hike, low stock hit home deals

AN inadequate supply and soaring prices have hurt transactions of existing homes in Shanghai, two of the city's leading real estate brokerages said yesterday.

The transaction volume shrank about 10 percent in the first half of this month compared with the previous two weeks at Shanghai Centaline Property Consultants Ltd while Shanghai Hanyu Property Consulting Co also suffered a month-on-month decline of 15 percent during the first 10 days of this month.

"A plunge in new supply and rapidly increasing prices have somewhat curbed sentiment among home buyers," said Lu Shanglun, deputy general manager at Centaline, which operates the largest brokerage chain in Shanghai.

"Many potential buyers decided to give up their purchase plans recently because of limited choice while prices rose too quickly."

A latest Centaline research has found that the new supply of existing homes began to shrink in May at its 150 plus branches, at an average rate of 20 percent month on month.

Meanwhile, the average sales price climbed 10 percent in the first half of this month compared with the last two weeks last month.

For instance, Nanhui and Baoshan's Gucun, two major areas targeting the mass market, have seen home prices jumped nearly 40 percent over the past six months, Centaline statistics showed.

The luxury home sector also witnessed the same story.

"The local high-end housing market has cooled since July as some investors began to adopt a `wait-and-see' attitude again after significant price increases," said Shao Minghao, a researcher at Hanyu.

For example, existing home transactions at Shimao Riviera Garden and Yanlord Town, two luxury projects in Pudong New Area with asking prices more than 40,000 yuan (US$5,860) per square meter, both dropped by more than 40 percent in the first 10 days of this month from a month earlier.

Industry analysts said they expected to see a possible 10-percent fall in transactions in existing homes in July and August from June during which a total of 28,900 residential units were sold across the city.


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