Drop in sales of new homes

Shanghai's new housing market showed a double-digit retreat in sales amid a lack of interest among buyers and developers, latest industry data showed.

The area of residential properties sold, excluding government-subsidized affordable housing, fell 25 percent from August to around 660,000 square meters as of Saturday, Shanghai Centaline Property Consultants Co said.

The average cost of a new home, meanwhile, shed 3.2 percent to 54,138 yuan (US$7,882) per square meter, a result of shift toward medium to low-end homes in remote areas, according to Centaline data.

"Following a quite well-performing August, coupled with the fact that September is usually a high season for property sales in a year, the final sales volume registered last month seemed to be a rather unsatisfactory one," Lu Wenxi, the firm's senior research manager, said. "Notably, robust sales recorded at outlying projects mainly targeting first-time buyers with a stringent budget outperformed way better than their downtown counterparts."

Five of the 10 best-selling residential developments in September cost no more than 30,000 yuan per square meter. One in the Pudong New Area's Nanhui, sold 486 apartments for an average price of 25,844 yuan per square meter while one in Chongming Island sold 339 units  for an average 28,371 yuan per square meter.

Around 743,000 square meters of new homes in 25 projects were released in September, a month-over-month drop of 44.3 percent, a.

About 69,000 new housing units were ou for sale across the city as of Saturday, a decrease of 36.1 percent from August, a separate report by Shanghai Homelink Real Estate Agency Co showed.

"We do expect real estate developers to suffer mounting pressure in the last quarter of this year as they are going to round up the year in three months," said Zhao Baogen, a Homelink analyst. "We will probably see larger price cuts soon taken by developers as they gear up to boost sales to replenish their capital."

In a separate move to foster development of the city's home rental market, the housing watchdog has announced a batch of supervision measures in the hope of further regulating home leasing in Shanghai with a particular focus on "loan service offered for rent payment."

Only qualified residential leasing companies and real estate agencies can provide such a service and they are not allowed to force or coax lessees into a loan. Contracts for home leasing and rent payment loans should be signed separately.

Residential leasing companies and real estate agencies should sign standardized leasing contracts with lessees on the city's official online platform for home rental and no rent payment loan service can be provided by any financial institutions without such online contracts.

Launched in July, Shanghai's official online platform for home rentals — www.shzfzl.gov.cn — backed by the Shanghai Housing and Urban-Rural Development Administration and the Shanghai Housing Administration Bureau, has maintained an inventory of more than 40,000 rental units, according to government data.