Shanghai home sales slide to six-year low

The number of Shanghai residential transactions fell to a six-year low last month after the central government enforced restrictions on the number of home purchases in an effort to curb demand.

Property website Soufun reported that the total dropped to 4,964 units, amounting to 576,000 square metres last month, the lowest since 2005. That represented a decrease of 25 per cent from July as average transaction prices edged down 1.1 per cent to 21,816 yuan per square metre.

'Slow sales in Shanghai are apparent as the central government will strictly enforce austerity measures in first-tier cities,' said Alan Chiang Sheung-lai, head of residential for Greater China at DTZ. 'Beijing will also be affected.'

Beijing's August home sales dropped 22.9 per cent to 13,664 from July, the lowest since 2009, Soufun said, quoting figures from the capital's property transaction website.

In Shanghai, the sale of flats at 30,000 yuan per square metre to 50,000 yuan per square metre fell 43 per cent, to 53,000 square metres last month as non-Shanghai residents and foreigners were prohibited from buying homes in the city unless they had worked there for a year, Soufun said.

In addition to a ban on residents purchasing more than two flats, there were growing difficulties in securing pre-sale permits, which contributed to fewer new projects, Chiang said.

In a bid to restrain prices, the city government was unlikely to approve projects offering flats at reduced prices, he said. 'Such price-control policies have greatly reduced the supply of new projects.'