Property market heads south for the summer

Weak sentiment abounded in Shanghai's new housing market with notable retreats in both sales and supply.

The area of new residential properties sold, excluding government-subsidized affordable housing, dropped 38.9 percent to around 144,000 square meters in the seven days to Sunday, the first decline in four weeks, Shanghai Centaline Property Consultants Co said in its regular Monday report.

Around the city, 10 areas/districts registered transaction volume of 10,000 square meters and above, though none managed to exceed the 20,000-square-meter barrier. The former Nanhui area and Qingpu District outperformed others.

"After extending strength for three straight weeks, it's within our expectation that the market will finally head south for a correction," said Lu Wenxi, Centaline's senior research manager. 

"As the traditional low season for property sales kicked off, it's highly likely that sluggish sentiment among both home seekers and real estate developers will become prevalent over the coming weeks," Lu said.

The average cost of a new home rose 5.1 percent from a week earlier to 54,935 yuan (US$7,955) per square meter, Centaline data showed.

In last week's top 10 list by area, four cost more than 50,000 yuan per square meter. One development in downtown Putuo District outperformed all by selling 9,590 square meters, or 95 apartments, for an average price of 87,493 yuan per square meter. Notably, two projects with a price tag of between 20,000 yuan per square meter and 30,000 yuan per square meter made into the list.

An even larger withdrawal was found on new supply, which had stayed above the 250,000-square-meter mark for three consecutive weeks.

Citywide, only about 72,000 square meters of new residential properties were released into the local market, a week-over-week plunge of 72.2 percent. More than 80 percent, or some 59,000 square meters spanning two projects, were located in Qingpu, according to Centaline data.