THE volume of homes transacted fell to 60,000 square meters in Shanghai last week, the worst weekly performance since 2005 amid a "wait-and-see" sentiment among buyers after the central government tightened mortgage policies.

Transaction of homes, excluding those designated for relocated residents, declined 16 percent in the week ended May 16 from a week earlier, Soufun.com, the real estate Internet services provider, said in a report yesterday.

Though average housing prices also fell by 8 percent from a week earlier to 22,873 yuan (US$3,349) per square meter last week, they were still considered high, according to the report.

"Potential buyers hold a 'wait-and-see' attitude after the government introduced new policies last month, so transactions will keep shrinking," said an analyst at Soufun.com.

On April 15 the central government raised the down payment on second-home mortgages to at least 50 percent from 40 percent.

Two days later, the State Council said in a notice that banks should suspend loans to buyers of third or more homes.

In Shanghai, where detailed guidelines have yet to be released by the local watchdog there has been speculation that the city is likely to implement a similar policy.

Meanwhile, the supply of homes rose 23 percent from a week earlier to 200,000 square meters, of which new homes gained 39 percent.