SHANGHAI'S new houses were sold at an average price of 1.63 million yuan (US$239,700) in the first half of this year, a jump of 27 percent from six months ago, a major real estate research firm disclosed yesterday.

Between January and June, a total of 45,257 units of new homes (excluding those designated for relocation uses), totaling 5.259 million square meters in terms of gross floor area, were transacted, with an average unit space of 116.2 square meters versus 124.6 square meters per unit in 2007, according to Shanghai Youwin Real Estate Information Service Co Ltd.

"A smaller per-unit space indicates the country's 70/90 policy is taking effect, and very likely, that might continue to decrease in the second half," said Xue Jianxiong, head of research at Youwin.

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

The policy applied to residential developments that were given approval to commence work after June 1, 2006.

Boost supply

The policy was introduced to boost the supply of small and medium-size homes and discourage building of luxury houses.

While the local supply of new housing fell 11.7 percent to 6.18 million square meters in the first six months, the transaction volume plunged nearly 50 percent to 5.259 million square meters during the same period. But average prices soared 41 percent to 14,026 yuan per square meter as more high-end residential properties were sold, statistics showed.

While the local property market has been rather slack in the first half of this year which was characterized by continuing low transaction volumes, some projects still proved to be very attractive for end-users, industry experts said.

Home buyers favor new apartments of 75 and 90 square meters which are located within and around the city's Outer Ring Road and are going for between 15,000 yuan and 25,000 yuan per square meter.