Home sales continued to drop in Shanghai in the first half of this month in both the new and secondhand market due to inadequate supply and decreasing affordability.

Transaction volume of new homes, excluding those designated for relocated residents, fell 10 percent to about 720,000 square meters between September 1 and 15, according to Shanghai Uwin Real Estate Information Services Co.

The city's secondhand home market suffered an even bigger setback. Century 21 China Real Estate, which operates the city's second-largest brokerage chain, said that volume retreated some 20 percent during the same period, with a few areas registering a 40 percent plunge.

"It's been a seller's market since the industry recovered strength after the Spring Festival," said Xue Jianxiong, an analyst with E-House (China) Holdings Ltd. "But the supply is lower now after sales started booming in March. With an insufficient new supply, transaction volume will decline further."

Citywide, the volume of new home sales rose each month from February through June and then turned southward in July and August. The average price for new homes climbed six consecutive months through last month, Uwin statistics showed.

"Sellers and buyers are showing a big difference in their views on prices of existing homes and as a result, more buyers are taking a wait-and-see attitude," said Huang Hetao, a researcher at Century 21.

A report released yesterday by E-House found that more than 10 residential projects in the city are or will soon sell homes at a price of more than 100,000 yuan (US$14,645) per square meter, compared with one such project four years ago.

(Shanghai Daily September 17, 2009)