Shanghai's homebuyers are regaining faith in the property market, with sales up 150.2 percent from February to 1.8 million sq m in March.

Average sales growth in March from February was around 90 percent during the past three years - usually a slow season for the property market, China Real Estate Index System said.

A total of 17,644 apartments were sold in March, up 72.7 percent from February. Around 42 percent of new developments saw an average price rise of 4.2 percent, while 13 percent fell an average 4.8 percent.

Analysts said rising prices show buyer enthusiasm is returning after the city's property market cooled, with sales shrinking a combined 16.6 percent in January and February.

"Stringent macro controls on real estate have to some extent affected market expectations in the first two months this year, HingYin Lee, director of Colliers International East China Consultancy & Research, said.

The China Banking Regulatory Commission's tough stance on loans and tighter credit at commercial banks made it difficult for developers to get capital.

The China Securities Regulatory Commission also said in March that capital raised from initial public offerings can't be used to buy land, which dampened developers' investment outlook.

Some developers, such as Evergrande Real Estate, postponed IPOs in Hong Kong due to poor market sentiment worldwide.

"But the Chinese government is not expected to issue more real estate tightening measures this year due to the possible economic slowdown," Lee said.

Meanwhile, "Vanke saw brisk sales after its sales promotion in February, and that also demonstrates the robust demand in a speculative market," Lee said.

"Market sentiment is expected to remain stable in the next few months and sales will not see large ups and downs," Zhang Qi, an analyst at China Real Estate Index System, said.

"High-end residential sales are expected to remain stable, and sales of apartments located on the city's outskirts are likely to drop," Lee said.

The supply of high-end apartments this year is expected to be only 52 percent of last year's, CB Richard Ellis said.

(China Daily April 9, 2008)