Shanghai's?high-end residential sales market will remain stable this year, according to major real estate services firms, as cooling measures introduced by the city since late last year are already having some effect on the local housing market.

"The scarcity of supply, a sanguine economic outlook and a continuous strong investment demand from wealthy Chinese as well as some overseas buyers who expect a steady appreciation of the Chinese currency over the medium term will continue to back strongly prices of luxury homes in the city," said Hing Yin Lee, director of research and advisory for east China operations at Colliers International. "The high-end housing market, driven by liquidity, is usually not targeted by the government in its policy adjustment."

Prices of high-end homes will continue to increase, albeit moderately, this year in the city while for homes in the mass market, price corrections at some developments which soared too rapidly over the past year seem inevitable, analysts said.

The recent tightening policies, which include a strict 40 percent down payment on second home mortgages, have left some impact on the local housing market which has already seen a drop of more than 50 percent in transaction volume of both new and existing homes so far this month, according to latest statistics released by research companies.

"The cooling measures are expected to slow home transactions in the short term, and investment and speculation in small- and medium-sized units and mid- to low-class apartments will be curbed," said Danny Ma, director of research for CB Richard Ellis China operations. "However, they will influence the high-end market slightly."

Sales at Yanlord Town, a high-end residential project in Pudong's Lianyang area, have been robust as 60 units had been sold at an average price of about 50,000 yuan (US$7,320) per square meter within a few days of its launch in mid-January.