Residential properties within Shanghai's Middle and Outer Ring roads were the top sellers for an average price of 15,000 yuan (US$1,987) per square meter at a closed real estate fair recently.

The fair, which closed on Saturday, attracted 180 property developers and service providers from both the city and neighboring provinces who offered nearly 300 real estate projects.

"Apartments with a price tag of around 15,000 yuan per square meter accounted for about 60 percent of the 700 pre-sale deals secured during the exhibition," said Chen Qihua, the deputy manager of sales and marketing at the Shanghai Exhibition Center, which organized the event.

"As well apartments with a gross floor area (GFA) of less than 90 square meters were well received by local buyers and made up about 30 percent of the sales."

Apparently unaffected by the latest government efforts to cool the country's overheated real estate market, there were more than 120,000 visitors to the four-day fair compared to the 80,000 who attended a similar event in May during the Labor Day holiday.

On September 27, the People's Bank of China and the China Banking Regulatory Commission announced that mortgage holders who applied for another home loan would be required to produce a down payment of at least 40 percent and pay a 10 percent premium on their interest rate, probably the hardest move on speculators so far by the central government, industry experts believed.

At present home buyers have to provide a down payment of at least 20 percent on apartments smaller than 90 square meters and 30 percent on larger properties but can usually get a 15 percent discount on their interest rate.

Industry sources said the new policy will not immediately affect potential house buyers and, with demand exceeding supply, housing prices will not be dropping.

However, the imbalance between demand and supply, which is probably the major reason for soaring housing prices throughout the country, will not last for too long, according to Chen Sheng, vice dean of the China Index Academy, a national real estate research organization.

"The serious efforts made by the central government, including the 70/90 policy, will increase market supplies and offer more choices for average-income home buyers."

In May 2006, the Ministry of Construction announced that the combined GFA of all residential units below 90 square meters in size should account for more than 70 percent of the total GFA of a project.

That policy is intended to raise the supply of more small and medium-sized apartments to make buying more affordable.

Property prices in 70 major Chinese cities jumped 8.2 percent in August from a year earlier, the biggest gain in almost two years, said the National Development and Reform Commission.

Shanghai's second-hand housing index, a major indicator reflecting the average housing price for Shanghai's used apartments, soared 6.03 percent in August, the biggest growth since 2004.

(Shanghai Daily October 8, 2007)