Shanghai’s property market stays cool in May

Property buying sentiment remained lackluster in Shanghai last month as rein-in policies continued to bite while holidays also damped interest of home seekers.

The area of new homes sold, excluding government-subsidized affordable housing, totaled around 710,000 square meters across the city in May, a month-over-month increase of 4.9 percent and a year-over-year drop of 28.1 percent, Shanghai Centaline Property Consultants Co said in a report released today.

"Housing transaction continued to fluctuate at low levels due to a number of factors," said Lu Wenxi, senior manager of research at Centaline. "Tightening measures continued to be rolled out and two holidays that fell last month, namely the Labor Day holiday and the Dragon Boat holiday, also kind of affected buyers' home-purchasing enthusiasm with no surprise."

In a latest move to stabilize and regulate the city's overheated housing market, the local industry watchdog announced early in May that a lottery system must be introduced in property sales at all new residential developments around the city. Notary offices are obliged to get involved in sales process to ensure fair play, the government said, though without saying when the new regulation should be enforced.

These new houses sold for an average price of 48,312 yuan (US$7,093) per square meter, a month-on-month rise of 2.9 percent, Centaline data showed.

Citywide, a residential project in outlying Nanhui, Pudong New Area, with a government-set price and built for qualified low-income buyers, topped last month's best-selling list. A total of 440 apartments at the development were sold for an average price of a little over 9,000 yuan per square meter. Out of the 10 most popular projects, four cost 50,000 yuan per square meter and above, with the most expensive one selling over 100,000 yuan per square meter.

On the supply side, some 446,000 square meters of new residential properties, majority of which targeting budget-tight first-time buyers and costing less than 40,000 yuan per square meter, were released to the local market last month, a decrease of 22.2 percent from April and a plunge of 64.9 percent from same period a year ago, Centaline data showed.

No major rebound should be expected this month as market momentum remained sluggish while June is also the traditional low season for property sales, Lu said.