THE first week of 2012 witnessed extremely sluggish sentiment among both homebuyers and real estate developers ahead of the week-long Spring Festival.

Sales of new homes, excluding government-funded affordable housing, plunged 42 percent from a week earlier to 86,300 square meters in Shanghai, the lowest in nearly three months, according to a Shanghai Deovolente Realty Co report released yesterday.

The supply of new homes, meanwhile, dived 93.7 percent from a week earlier to 15,600 square meters during the 7-day period that ended on Sunday - an 11-month low.

"As austerity measures remain vigorously enforced and the Spring Festival holiday is just weeks away, more home seekers and developers have chosen to sit on the sidelines for a while," said Lu Qilin, a researcher at Deovolente. "And the market momentum is unlikely to pick up at least until next month."

New homes sold for an average of 19,336 yuan (US$3,060) per square meter across the city last week, a weekly drop of 18 percent, as seven of the city's 10 best sellers were low-cost developments priced on average below 13,400 yuan per square meter.

A residential project in suburban Fengxian District became the city's top-selling housing project last week after registering sales of 109 apartment units, totaling 10,868 square meters, with an average price of 7,002 yuan per square meter, according to data released yesterday by Shanghai Uwin Real Estate Information Services Co.

For the whole year, new home supply in Shanghai would likely drop 20 percent from 2011 to around 8 million square meters, Century 21 China Real Estate forecast yesterday.