Surge in supply fails to excite new home buyers

Sluggish sentiment among home buyers continued to linger in Shanghai last month despite a surge in supply, the latest market data showed.

Sluggish sentiment among home buyers continued to linger in Shanghai last month despite a surge in supply, the latest market data showed.

The area of new residential properties sold, excluding government-subsidized affordable housing, fell 5.3 percent from March to some 463,000 square meters, or the lowest April volume since 2010, Shanghai Centaline Property Consultants Co said in a report released today. Year on year, that represented a fall of 31.6 percent.

"With no sign of policy loosening, new home sales in Shanghai remained generally subdued for another month when the Qingming Festival and the Labor Day holiday also put some potential buyers temporarily on the sideline," said Lu Wenxi, senior manager of research at Centaline. "As supply rebounded notably, we do expect to see a much better performing May."

Nearly 1.06 million square meters of new houses were launched into the market in April, a month-over-month soar of 168.3 percent, the highest in 22 months, Centaline said.

"About 9,200 units of new homes were released last month across the city, outnumbering the total supply in the first quarter which stood at some 8,800 units," Shanghai Homelink Real Estate Agency Co wrote in a separate report released today. "In particular, some 7,500 units were rolled out in the second half of April, which might also help explain why sales didn't jump along with the surge in supply."

The average cost of new homes climbed 2.9 percent from a month earlier to 46,947 yuan (US$7,373) per square meter in April, as medium to low-end properties continued to be the most sought-after type among home buyers, Centaline data showed.

Eight of the 10 best-selling developments bear a price tag of between 30,000 yuan and 60,000 yuan per square meter. One project in outlying Qingpu District emerged as the most popular development after unloading 80,548 square meters, or 838 apartments, for an average price of 29,685 yuan per square meter.

A China Vanke project in Beicai, Pudong New Area, which sold 111 units for 66,948 yuan per square meter on average, was the most expensive one in April's top 10 list, according to Centaline data.

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