Shanghai Mayor Han Zheng yesterday discounted earlier news media reports that large numbers of home buyers are canceling their purchase agreements and demanding refunds because of falling property values in the city.

Han, who was in Beijing attending the annual session of the National People's Congress, told reporters that there is no "housing refund wave" in the city.

Several newspapers reported late last year that many home buyers were trying to cancel purchase agreements and retrieve their deposits after their developers cut prices for surrounding unsold units in an attempt to spur the sluggish market.

Most of these buyers had purchased uncompleted apartments at the end of 2004 or the beginning of 2005 when housing prices peaked.

But prices have been sluggish since last June, when new taxes aimed at speculators halted a six-year boom during which housing costs almost tripled.

The average price of a city apartment rose only 4.9 percent to 6,698 yuan (US$837) a square meter last year, after more than double-digit growth the year before.

And in January, prices dropped 0.4 percent from the same month last year, according to the National Bureau of Statistics (NBS).

As some developers launched deep discounts, some buyers who had not taken possession of their homes opted to pay a penalty fee for breaching their pre-sale contract rather than complete a transaction at what they believed to be an inflated price.

In December, city government said it would not step in to settle these disputes, calling them private matters.

Han said the city has stabilized the real estate market and is bringing the prices under control, Xinhua news agency reported.

The mayor also said yesterday that Shanghai is building a comprehensive housing subsidy system to improve its citizens' living conditions. He did not provide details, however.

In other moves to help more people buy homes, city government in March increased the maximum limit for second-hand home buyers seeking mortgage loans from the municipal public housing fund, which provides lower-income credit.

Self-employed residents and private business owners were also made eligible for the program for the first time.

(Shanghai Daily March 9, 2006)