THE average price of new homes in Shanghai fell to the lowest in six months last week as a few real estate developers began to slash prices to trigger sales.
New homes, excluding affordable housing, were sold for an average 19,348 yuan (US$3,056) per square meter during the seven-day period ended Sunday, the lowest in 27 weeks, according to research from Shanghai Deovolente Realty Co.
Transactions, meanwhile, jumped 46.3 percent from a week earlier to 138,700 square meters, Deovolente data showed.
"Significant price cuts offered by several developers across the city, though arousing anger among its current homeowners, immediately boosted sales and dragged the average price down below the 20,000-yuan-per-square-meter barrier, the first time in more than 10 weeks," said Lu Qilin, a researcher with Deovolente. "For the whole of October, new home sales will probably hover around only 450,000 square meters, a decrease of around 20 percent from September."
Last week, a residential project in outlying Jiading District by Longfor Properties became the city's most sought housing after its developer cut prices to just over 14,000 yuan per square meter from the previous over 17,000 yuan per square meter.
Infuriated earlier buyers smashed the developer's sales office after learning of the price cut, demanding purchase price adjustments or cancellations, but without success.
Another Longfor project in Songjiang District also registered very good sales, or 124 units, during the same period after an attractive price of less than 16,000 yuan per square meter was offered, said Shanghai Uwin Real Estate Information Services Co.
The developer previously planned to launch its apartment units for well above 20,000 yuan per square meter, some industry sources said.
"There is no sign that the central government will relax its tightening policies anytime soon, so we expect more developers to follow suit if home sales remain sluggish," said Huang Zhijian, chief analyst at Uwin. "We believe that under the current market environment, a 15 percent discount might be effective to boost sales."
In Shanghai, more than 160 new housing developments are scheduled to offer promotions or direct price cuts to boost sales this month, an increase of nearly 10 percent from October, a latest Soufun research showed. Among them, 19 projects will offer price cuts of more than 10 percent, the real estate website said.
Premier Wen Jiabao said recently the central government will "firmly" maintain its austerity measures to rein in speculation and cool down the overheated real estate market.