Shanghai's housing market remained lackluster in January as supply and sales dropped significantly during the Spring Festival holiday.

New home supply, excluding homes built for relocation uses, totaled only 150,000 square meters in the city, a plunge of 85.71 percent from December.

Meanwhile, a total of 480,000 square meters of new homes, excluding those meant for relocated residents, were sold, a month-on-month fall of 43.53 percent, according to statistics released yesterday by Shanghai Uwin Real Estate Information Services Co.

Meanwhile, new homes were sold at an average 13,974 yuan (US$2,045) per square meter in the city last month, a rise of 15.78 percent from December 2008, as more homes in downtown areas were sold.

Uwin statistics showed that residential projects located in the downtown districts of Zhabei, Changning and Putuo ranked the top three in terms of transaction area in the city last month.

"The weeks before and after the Spring Festival are usually periods of low sentiment'' for home purchases, said Lu Qilin, deputy head of research at Uwin. "But this year's drop in new home sales was small, compared to previous years.''

According to the company's statistics, sales of new homes (during the month of the Spring Festival holiday) plunged 67.81 percent, 42.62 percent and 59.2 percent in 2006, 2007 and 2008, respectively.

Industry experts said most real estate developers are still taking a wait-and-see attitude due to growing market uncertainties.

"Developers have become very cautious and conservative now and many prefer to hold their projects for a while as can be seen from a significantly shrinking supply,'' said Xue Jianxiong, an analyst at E-House (China) Holdings Ltd.

The retail and office markets also declined during the same period.

A total of 105,000 square meters of retail properties were sold in the city in January, a drop of 52.72 percent from a month earlier. About 92,000 square meters of office space changed hands last month, a fall of 15.6 percent from December.

(Shanghai Daily February 2, 2009)