Price for existing properties in Shanghai finally tailed off in August, and sales volume continued to decline - indicating that a market correction may have begun.

New-home prices were down as well, falling for the third straight week.

About 23,700 units of existing properties were sold across the city last month at an average price of 12,700 yuan (US$1,859) per square meter, a drop of 18 percent in volume and a retreat of 1 percent in price, according to a report by Century 21 China Real Estate.

"Notably, the price decrease, though very slight, was the first in 10 months while transaction volume has been losing strength for two straight months," said Huang Hetao, a researcher at Century 21 China Real Estate, which runs the city's second-largest brokerage chain. "The drop in both volume and price indicated that a correction might have started."

Only three suburban districts - Fengxian, Jinshan and Qingpu - registered increases in volume while the downtown districts of Huangpu, Jing'an, Xuhui and Yangpu recorded drops of more than 30 percent, Century 21 said.

A larger down-payment requirement for second homes coupled with widened price gaps between sellers and buyers have been hindering sales of existing homes, industry analysts said.

In particular, sales of existing properties costing less than 900,000 yuan per unit continued to shrink in August, accounting for 59 percent of total deals secured last month. Meanwhile, those with a price tag between 900,000 and 1.5 million yuan, 1.5 million to 3 million yuan and 3 million to 5 million yuan, all gained slightly, taking 26 percent, 11 percent and 2 percent of the deals, respectively.

Stability ahead

The local existing-property market is expected to remain relatively stable during the rest of the year with no significant changes in volume or price, industry analysts said.

Meanwhile, new home prices tumbled 10 percent to 16,698 yuan (US$2,445) per square meter between August 31 and September 6 while transaction volume remained almost unchanged at 377,600 square meters, Shanghai Uwin Real Estate Information Services Co said yesterday.

Half of the top 10 best-selling housing projects during the past week were located in suburban Baoshan and Nanhui and influenced the drop in average price, Uwin said.

(Shanghai Daily September 8, 2009)