PURCHASES of new homes in Shanghai rose to the highest in eight weeks, more evidence that the housing market is rebounding, market data released today showed.

The city saw the sales of new homes, excluding government-funded affordable housing, hit 140,400 square meters last week, a surge of 68.3 percent from the previous seven-day period, according to a report by Shanghai Deovolente Realty Co.

Average prices were 19,490 yuan (US$3,093) per square meter, a retreat of 5.7 percent from a week earlier.

"Home buying sentiment extended a rally for the fourth straight week in the city amid notably improving demand for mid- to low-end apartments after developers cut their prices," said Lu Qilin, a researcher at Deovolente. "That's why average price also fell below the 20,000-yuan-per-square-meter barrier again after staying above the threshold for three consecutive weeks."

New houses costing less than 20,000 yuan a square meter accounted for two thirds of total transactions recorded last week across the city with eight of the city's 10 best-selling residential projects bearing a price tags within that range, Deovolente data showed.

"Demand is getting a boost as more homes become available and the trend is poised to continue over the next two months," said Huang Hetao, a research manager at Century 21 China Real Estate, operator of the city's largest estate chain in terms of outlet numbers. "From next month, more houses are expected to be released to the local market when more developers will come to agree that price-cutting is the only effective strategy at the moment to trigger sales as far as tightening measures all remain in place."