The rate of increase in Shanghai's second-hand housing prices slowed through the quarter ended last month, indicating a mild increase in this year's housing market.

The benchmark index for second-hand housing prices in Shanghai increased 1.16 percent to 1,304 points last month, compared with a 1.26 percent gain in February and 1.4 percent rise in January, the Shanghai Existing Property Index Office reported Monday.

For the year, the office forecast existing housing prices to rise at a "rational speed," after surging for more than two years.

The government's restriction of uncompleted flat transfer and introducing an online trading system will end some short-term speculation in the housing market, said Huang Weiwei, secretary-general of the Shanghai Existing Property Index Office.

"As the market is better regulated, some investors may face problems from the crunch in their cash flow," Huang said.

The policy restricting uncompleted flat transfer is waiting approval from the Standing Committee of Shanghai People's Congress tomorrow. The online trading system is expected to contain information of all residential projects on sale by June 1. Both are aimed at creating more transparent trading procedures.

Mao Yuxin, researcher of Coldwell Banker Shanghai, said the new policies would secure a stable growth in the local housing market over the long run.

"Previously, speculators made quick money through property transfers before units are completed. That hurt the final buyer - usually those who are in real need of housing," Mao said.

"The new policies will ensure both long-term development and benefits of common home-seekers."

Last month, performance of pre-owned apartments in Changning District, near the Shanghai Zoo, surged 6.9 percent. The housing prices in the area increased 391 yuan (US$47) per square meter in merely one month to 6,086 yuan. Apartments in neighboring Beixinjing area also saw prices rise more than 5 percent, due to imminent extension of Rail Transportation Line 2.

"Prices of mid- and low-range apartments still have growth potential, thanks to the large demand from common wage earners," Huang noted. "Some aged flats are popular for their low unit prices."

Meanwhile, the report noted that lower rent income is expected to curb investors' sentiment in the local property market.

(eastday.com April 13, 2004)