NEW home sales in Shanghai during the week-long Lunar New Year holiday fell to the lowest in seven years on a sluggish buying sentiment.

More than 1,700 square meters of new homes, or 16 units, excluding government-funded affordable housing, were sold across the city during the holiday which ended on Saturday, the lowest since 2006 when the city's housing data were first tracked, said a report released yesterday by Shanghai Deovolente Realty Co.

The sales by area fell 33.3 percent from the Lunar New Year holiday in 2011, and the unit number shed 27.9 percent.

"The Spring Festival, a traditional slack period for home purchase in China, coupled with ever-growing expectations of home seekers for a further cut in prices, jointly contributed to the record low volume," said Lu Qilin, a researcher at Deovolente.

Huang Zhijian, chief analyst at Shanghai Uwin Real Estate Information Services Co, said: "The local government will soon raise the income threshold for budget home applications, and that will certainly damp market demand further.

"Real estate developers will have to offer some notable discounts within the next months if they wish to trigger sales and replenish capital as austerity measures remain in place."

Data from Uwin showed 205,000 square meters of new homes were sold during the first 29 days of January.