Shanghai's rising housing prices are unlikely to stop anytime soon and may post a 30-percent growth rate this year, an industry report indicated.

The Shanghai Housing Index, the benchmark for the city's new housing prices, increased 2.5 percent last month to hit 1,038 points, the Shanghai Real Estate Index Office reported yesterday. For the first nine months, the index has already surged 23 percent, compared with an annual 15.5 percent growth in 2002.

Based on the sharp increase in the first three quarters, the index office raised its forecast for the annual growth rate to 30 percent from the previous 25 percent made in August.

The average new housing price was 4,553 yuan (US$549) at the end of 2002, according to the National Bureau of Statistics. A 30-percent growth indicates the price will rise to about 5,900 yuan at the end of this year.

"The large increase indicated strong demand for property investment, particularly in the high-end residential projects priced above 8,000 yuan per square meter," He Xiaocheng, an analyst at the index office, said.

Apartments totaling 16.09 million square meters were sold during the period, while 16.08 million square meters of projects were completed.

The large demand for property investment also digested vacant housing areas in Shanghai, said Luo Xinyan, researcher at the Shanghai Statistics Bureau, in a report yesterday.

In the first nine months, the vacant area of Shanghai's housing market decreased 30.9 percent to 926,800 square meters.

In line with the rise in new housing prices, the city's second-hand housing prices rose 1.8 percent last month for the 22nd consecutive month.

Apartments in Minghang, Xuhui and Changning districts posted monthly increase of 3 percent. The residential projects along the Rail Transportation No 1 in Minghang District recorded the highest rise at 6.1 percent.

"It's a chain reaction. The rising trading volume and prices of new apartments also boosted the second-hand housing market," said Zhang Hongming, real estate expert at the Shanghai Academy of Social Sciences.

Zhang noted, however, the growing supply of apartments available for rent has caused a decline in rentals and may cut investors' profit margin.

(Xinhua News Agency October 14, 2003)