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Shanghai home sales cool last week due to structural shift

By Cherry Cao | July 11, 2016, Monday | Online Edition

SHANGHAI'S new home market lost its steam last week with transaction volume retreating from a three-month high and average cost touching a seven-week low as a result of structural shift.

The area of new residential properties sold, excluding government-subsidized affordable housing, plunged 37.1 percent from the previous seven-day period to 248,900 square meters, the lowest weekly volume registered in four weeks, Shanghai Homelink Real Estate Agency Co said in a report released today.

"The latest withdrawal of the market appeared quite normal after gaining strengths for three straight weeks," said Lu Qilin, director of research at Homelink. "Meanwhile, July and August are traditional low seasons for property sales because of the hot weather and the beginning of a month is often a slack period compared to the end of a month."

As usual, suburban districts such as Fengxian and Jiading, which boast comparatively more abundant supply and better affordability, recorded the most robust sentiment among buyers. About 34,000 square meters of new houses were sold in Fengxian while Jiading followed with some 32,000 square meters.

The average cost of new homes, meanwhile, also dropped amid lackluster sales of medium- to high-end properties.

The new homes fetched an average price of 34,678 yuan (US$5,175) per square meter, a week-over-week plunge of 9.2 percent, according to Homelink data.

"The weekly fall was mainly due to a structural shift with eight of the 10 best-selling projects bearing a price of less than 30,000 yuan per square meter on average," Lu added.

Citywide in the high-end segment, only 110 new housing units costing 80,000 yuan per square meter and above were sold last week, a sharp decrease of 136 units from the previous seven-day period.

On the supply side, sentiment among real estate developers continued to fall, posting weakness for the third consecutive week. About 111,500 square meters of new residential properties were released to the local market, a week-over-week decrease of 43.1 percent, Homelink data showed.

"Generally speaking, we don't expect new home supply to see a major rebound until September and October, which are traditionally the best season for property sales in a year," said Lu Wenxi, a senior manager of research at Shanghai Centaline Property Consultants Co.

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