New home market enters correction after four-week rally

New home-buying sentiment in Shanghai cooled for the first time in five weeks amid continuously sluggish new supply, the latest market data showed.

The total area of new residential properties sold, excluding government-subsidized affordable housing, dropped 28.4 percent week over week to around 164,000 square meters during the seven-day period ending Sunday, Shanghai Centaline Property Consultants Co said in a regular report issued on Monday.

"The setback was within our expectations because on one hand, it's a correction the market needed after a four-week rally," said Lu Wenxi, Centaline's senior researcher. "On the other hand, new home supply stayed below the 50,000-square-meter mark for two straight weeks, which seems hard to fuel growth."

Across the city, some 45,000 square meters of new homes spanning three projects were released into the local market, a further decrease of 5.8 percent from the previous week.

Outlying areas of Baoshan District, the Nanhui region of the Pudong New Area and Qingpu District outperformed others with weekly sales of around 23,000 square meters, 20,000 square meters and 16,000 square meters, respectively, Centaline data showed.

Despite a major withdrawal in transactions, the average price of new homes rose 18.8 percent week over week to 66,770 yuan (US$9,515) per square meter, fueled by a notable shift in interest toward high-end and luxury apartments.

Among the top three best-selling projects, two cost above 140,000 yuan per square meter. Meanwhile in the top 10 list, six sold for more than 70,000 yuan per square meter, according to Centaline data.

Dwarfing all was a development in Baoshan, where some 16,454 square meters, or 166 units, of new homes were unloaded for an average price of 72,432 yuan per square meter. A Shui On Land project in the downtown Xintiandi area of Huangpu District came most closely after selling 6,620 square meters, or 19 apartments, for an average cost of 170,916 yuan per square meter. Rounding out the top three was a project in rapidly developing Qiantan of the Pudong New Area, which sold 4,760 square meters, or 28 apartments, for an average price of 144,363 yuan per square meter.