Home market continues to warm up in Shanghai

NEW home buying sentiment climbed for the third consecutive month in Shanghai amid improving supply, getting the new year off to a better-than-expected start as tightening policies remained strictly enforced.

The area of new residential properties sold, excluding government-subsidized affordable housing, rose 7.1 percent from a month ago to some 500,000 square meters in January, Shanghai Centaline Property Consultants Co said in a report released today. Year on year, that represented a jump of 28.5 percent.

"Fuelled by nearly doubled new supply from December, as well as a Spring Festival holiday falling in mid February this year, the first month of 2018, did outperform our earlier forecasts," said Lu Wenxi, senior manager of research at Centaline. "Homes targeting cash-tight first-time buyers in outlying areas of the city continued to be the most sought-after type."

The average cost of new homes stood at 43,330 yuan (US$6,884) per square meter, a decrease of 12.7 percent from December and a drop of 7.4 percent from same time a year ago, according to Centaline data.

By price range, six out of the 10 most popular projects sold for less than 40,000 yuan per square meter and three of them cost less than 30,000 yuan per square meter.

On the supply side, about 440,000 square meters of new homes were released to the local market last month, a monthly surge of 94.7 percent and a yearly rise of 18.6 percent.

Sentiment among real estate developers seemed to pick up as some of them chose to launch their entire inventory in just one batch instead of several batches over a longer period of time which was a regular tactic for developers to raise prices.

A project in remote Nanxiang, Jiading District, for instance, released all of its 51,000 square meters of new homes to the local market last month and got nearly 20,000 square meters, or 212 units, unloaded as of the end of January.