Shanghai new home sales stay sluggish

New residential property sales continued to remain sluggish in Shanghai, staying below the 150,000-square-meter threshold for the second straight week.

The purchases of new homes, excluding government-subsidized affordable housing, edged up 0.98 percent to 134,900 square meters from last week, Shanghai Deovolente Realty Co said in a report released yesterday.

Average cost of the new houses rose 6.8 percent week on week to 28,336 yuan (US$4,562) per square meter amid comparatively robust sales of luxury properties, the report said.

"While some real estate developers started to cut prices to lure potential buyers, the discounts offered were still unattractive," said Lu Qilin, a researcher with Deovolente. "If such a scenario continues, we expect developers to provide larger cuts as late as September which is usually the best season for property sales in China."

Sales of luxury homes, each costing more than 50,000 yuan per square meter, totaled 100 units last week, a significant increase of 62 from the previous week. Citywide, three of the 10 best-selling projects cost more than 40,000 yuan per square meter.

Smaller cities have relaxed their tightening measures to boost property sales. Suzhou in neighboring Jiangsu Province has removed restrictions on any purchase of homes larger than 90 square meters for both local and non-local buyers, the latest in the country to conditionally lift the ban. However, restrictions remain for houses smaller than 90 square meters.