Shanghai's residential market is undergoing a modest recovery with both prices and transaction volumes registering growth for three consecutive weeks, agents said. Buoyed by the evidence of a rebound in home-buying confidence, about 33 developments - largely in the city's outer ring area - would be ready for sale this month, mainland property website SouFun said. 'Developers had chosen to defer the marketing of the new projects for months since buying sentiment had been dampened by the government's tough measures to curb property prices,' said Fung Wang-yui, general manager at Midland China's Shanghai office. But with sentiment on the rise, the deferred projects were now likely to be taken out of mothballs and put on the market. 'We will then see a steady rather than significant rise in prices,' Mr Fung said. According to data from property consultant DTZ, about 48,000 square metres of residential space in the primary market changed hands last month, up 22 per cent from February - a traditional low season because of the Lunar New Year. The average transacted prices was up 11 per cent last month to 11,988 yuan (HK$13,323), it said. The increase in volumes was due mainly to some developers offering discounts in February, agents said. The discounting was led by China Vanke, which cut prices by up to 5 per cent on unsold villas and flats in Shanghai during a sales exhibition. DTZ said the average transacted price in March was up 2.39 per from December. Jenny Wu, a residential director at DTZ, said the delayed launch of deferred projects would not put property prices under pressure. 'Most of the deferred projects are in the outer ring area and their release should not have a big impact on sales in the urban area,' Ms Wu said. In addition, the supply due to come on to the market would be dominated by smaller units of below 90 square metres, she added. 'And demand for smaller flats is growing as they require a smaller lump-sum down payment,' she said. According to a SouFun survey last week, more than half of the 33 new projects to be put on sale are in the outer ring road. Ms Wu said prices for these flats would be about 10,000 yuan per square metre. SouFun forecast that new flats due for launch at Ba Hui Yuen, in the city centre of Xuhui district, would be offered at between 30,000 and 35,000 yuan per square metre, compared with current transaction prices in the area of about 25,000 yuan. Mr Fung said he did not expect home prices in urban areas - which ranged from 40,000 to 110,000 yuan per square metre depending on the projects' quality - to be offered at a discount due to tight supply.