Trading volumes in the residential property market have staged a recovery in the last two weeks after the Shanghai government came up with its stimulus plan last month, statistics show.

According to a report by housing service provider E-House Research Center, last week residential property sales in Shanghai rose 24.6 percent to 176,600 sq m. During the week available new residential property rose 36.03 percent to 322,800 sq m.

The robust performance of the Shanghai housing sector comes at a time when China's residential property market has been downgraded by most institutions and also shunned by potential homebuyers.

Analysts believe the policy package has helped improve sentiments. On October 20, the Shanghai government announced a stimulus plan, starting November 1, to revive the sagging property market.

The plan includes lowering of transaction tax, cutting payment ratios, stamp tax exemption for personal property buyers and sellers, and enhancing the mortgage loan ceiling to 800,000 yuan from 600,000 yuan for first-time homebuyers.

"The policy acted as a shot in the arm for the housing market," said Chen Shiliing, deputy general manager of Yungching Real Estate (Shanghai), a housing brokerage firm. According to Chen, 4,165 new flats were traded in Shanghai in November till date, up 27 percent over last month. "Although the trading volume of new flats is still lower than the 8,978 flats traded last year, it is picking up after the stimulus plan," said Chen.

Hui Jianqiang, an analyst with E-House Research Center, feels that the trading volume turnaround is a positive reaction to the policy. "In the long run, the housing market may feel the squeeze from the budget housing project," he said.

(China Daily November 27, 2008)