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Volume falls but buying momentum still strong

HOME buying momentum continued to be strong in the first half of this month though the transaction volume of used apartments fell slightly amid a wide bid-offer spread and tightened loan policies.

Second-hand home deals withdrew 4.1 percent during the first half of May at Century 21 China Real Estate, a leading property chain in Shanghai.

"The 4 percent dip was rather a normal fluctuation and transaction of used apartments still remained active across the city over the past two weeks," said Huang Hetao, a researcher at Century 21.

"In particular, buyers who purchased homes for upgrading and investment purposes have been increasing recently."

According to Century 21 statistics, deals involving apartments priced from 1.2 million yuan (US$175,695) to 3 million yuan jumped 4.5 percent in the first half of this month while those below 1.2 million yuan and above 3 million yuan dropped 2.2 percent and 2.3 percent, respectively.

In Shanghai, most individual buyers choose apartments priced between 1.2 million yuan and 3 million yuan for upgrading purposes, industry insiders said.

Shanghai Centaline Property Consultants Ltd, the city's largest brokerage chain, also confirmed it had seen more investors recently.

"Demand for investment has been growing," said Ma Ji, head of research at Shanghai Centaline. "Notably, used apartments in Changning's Gubei and Pudong's Century Park, areas typically favored by investors, have been receiving much attention recently."

The city's second-hand housing market began to pick up in February when 15,000 homes changed hands. It jumped to 25,700 in March and soared to 28,600 units in April, the highest monthly figure since 2006.

Industry insiders said a wider bid-offer spread, mainly due to owners raising prices, would slow down transactions while banks' tightened loan policies could also lead to a drop in volume.


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