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December 8, 2009

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Shanghai's new home weekly average price soars to highest

THE price of new homes soared to a record 20,826 yuan (US$3,049) per square meter on average in Shanghai last week as an imbalance between supply and demand and unwavering buyer sentiment continued to push up property prices across the city.

The weekly average price was the highest since the city started to track its home prices, industry statistics showed.

The previous record was set between August 10 and 16 when new homes were sold at a little more than 20,500 yuan per square meter across the city.

The transaction volume dropped 25 percent to 296,000 square meters during the seven-day period and supply retreated 15 percent to 295,900 square meters, according to a research released yesterday by Shanghai Uwin Real Estate Information Services Co.

"While the home price has been surging rapidly since the second quarter of this year, (supply of) the so-called 'normal houses' have been shrinking significantly in the city," said Lu Qilin, a researcher at Shanghai Uwin. "Our statistics showed that at the moment, only 12 percent of new homes, excluding those designated for relocated residents under urban redevelopment projects, sold in the city could be defined as normal housing."

In the existing home market, a recent research conducted by Century 21 China Real Estate found that the proportion of normal housing also fell to 55 percent in October in the city from some 80 percent in November 2008.

Shanghai in November 2008 revised the criteria for "normal housing" to let more first-time home buyers enjoy preferential mortgage policies in a move aimed to boost the city's property market. After the revision which took effect on November 1, 2008, about 50 percent of homes sold at that time were defined as normal housing, industry people said.

Under the revised scheme, a flat in the city's Inner Ring Road costing less than 2.45 million yuan is defined as normal housing if its floor space is smaller than 140 square meters.

The price of a normal apartment sited between the Inner Ring Road and the Outer Ring Road is capped at 1.4 million yuan while a home outside the Outer Ring Road costs 980,000 yuan at the maximum.


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