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Up to 9 months to clear stock

IT may take as long as nine months to clear the city's stock of new homes if there is no new supply in the period.

By March 31, a total of 7.62 million square meters of new houses, excluding those designated for relocation uses, were available for sale in the city, Shanghai Uwin Real Estate Information Services Co said yesterday.

"Real estate developers remain under pressure to clear their stock of homes after suffering sluggish sales last year," said Lu Qilin, deputy head of research at Uwin. "It might take roughly three quarters to reduce the current stock if homes are sold at the current pace throughout the year while at the same time no new supply is introduced during the period."

A total of more than 2.7 million square meters of new homes were sold in Shanghai in the first three months of this year. Last month's sales hit a 16-month high when 1.5 million square meters of new homes were bought. Meanwhile, about 1.94 million square meters of new homes were launched in the local market during the quarter, according to Uwin's statistics.

For the whole year, the local supply of new homes may likely reach 11 million square meters against 12.3 million square meters last year, E-House China (Holdings) Ltd predicted earlier.

Reducing inventories has become a top priority for real estate developers this year, industry experts said earlier.

Major Chinese cities might take an average of six to seven months to clear their stock of homes but smaller cities may take 12 to 16 months to do so, Alan Chiang, head of residential for real estate firm DTZ's China operations, said in January. As prices began to correct earlier in the large cities, they may cut their stock by a faster rate than smaller cities, Chiang said.

New home sales in major cities dived 46 percent last year compared to 2007, according to DTZ statistics.


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