New home sales retreat despite surge in supply

New home sales suffered a two-digit retreat in Shanghai last week despite a surge in supply, the latest market data showed.

The area of new residential properties sold, excluding government-subsidized affordable housing, dropped 16.8 percent to 68,000 square meters during the seven-day period ending on Sunday, staying below the 100,000-square-meter threshold for the third straight week, Shanghai Centaline Property Consultants Co said in a report released today.

Across the city, outlying Qingpu District maintained its No.1 position for the second week, though transactions plunged 42 percent to around 14,000 square meters. It was followed by Minhang and Jiading districts, where new home sales both failed to reach 10,000 square meters.

"What seemed to be a surprise was that new home supply hit a 28-month high last week but the beginning of the year is usually a low season for the property market," said Lu Wenxi, senior manager of research at Shanghai Centaline. "As the majority of new homes released into the market asked for no more than 50,000 yuan per square meter, we could probably expect a major rebound before the lunar new year holiday, which will fall around mid February."

A total of 231,000 square meters of new residential properties spanning six projects were released in the city last week, a week-over-week jump of 168.8 percent, Centaline data showed. 

Notably, a residential development in remote Nanqiao, Fengxian District, launched in one batch some 86,000 square meters, or 836 units, of new homes.

The average cost of new residential property remained almost unchanged at 49,190 yuan (US$7,671) per square meter, according to Centaline data.

A residential project in Qingpu remained the city's most sought-after project for the second week after unloading 7,302 square meters, or 76 units, for an average price of 38,824 yuan per square meter. Out of the 10 most popular projects, eight cost no more than 50,000 yuan per square meter.