The downturn in the Shanghai property market and a drop in turnover have forced the closure of about 30 per cent of the city's property agents, the first casualties in Beijing's war to cool the market. Industry sources said that 3,000 to 4,000 of the city's 16,000 agency outlets had closed since April because of central and city government measures to rein in China's most overheated property market, where prices have more than doubled in the past seven years. The most drastic measure took effect on June 1, a joint decree issued by seven ministries, including the central bank and the Ministry of Construction, which ordered a 5 per cent tax on property owners who sell within two years of purchase. 'Turnover is stagnant, especially after the imposition of the tax,' said Chen Yi, manager of a branch of Centaline Shanghai, one of the city's biggest property agents. 'The number of landlords who want to sell has diminished and buyers are taking a wait-and-see attitude. I expect this to continue another three to six months.' She reported a drop in turnover of 70 per cent in north Shanghai over the past two months, compared with a year ago. On June 1, the city had 358 transactions of new homes, down from 462 on May 9 and 604 on March 16, according to property internet portal eHomeday. It is this drop in transactions that sounded the death knell for the agents who rely on commissions for their income. At the end of last year, the city had about 14,000 agent outlets and, spurred by the booming market, the firms added an extra 2,000 in the first quarter. The semi-official Property Window website said that, during the final week of last month, average prices were 6,963 yuan per square metre, a slight drop from a week earlier, with prices in 10 of the city's 19 districts falling and increases in the rest. The average price last year was 6,385 yuan per square metre. Zhu Feng, general manager of Zhong Rui Market Research, said most investors were taking a wait-and-see attitude. 'Some, with dozens or even more than 100 apartments, are in a cash squeeze and are forced to sell at a low price, but they are limited,' he said. 'Demand in Shanghai remains strong. This is why developers are prepared to wait.' Min Feng, manager of Shunchi Group, said the government pressure would only have a short-term impact. 'I see this lasting only several months, with a big rebound in October.' Pang Yuan, deputy director of the city Property and Land Management Bureau, said that rumours of a sharp drop in prices were unfounded. 'The market will not rise or fall sharply. The government has a good ability to regulate the market.' Lin Rong, of Shanghai Dao Bang Investment Consultancy, said that, with the stock market in the doldrums and the property market under pressure, many investors did not know where to put their money. 'They may turn to franchises or commercial property, which is more long term and less speculative than residential,' he said.