NEW homes in Shanghai were sold at about 10 percent cheaper on average last week as developments in outlying areas dominated the city's best-selling projects.

The average price of new homes, excluding those built for residents under urban redevelopment plans, fell from a week earlier to 21,146 yuan (US$3,175) per square meter across the city, ending its three-week rally during which it stayed above 23,000 yuan per square meter, Shanghai Uwin Real Estate Information Services Co said yesterday.

New home sales, meanwhile, dipped 0.9 percent week-on-week to 229,000 square meters, almost equivalent to the weekly average volume in the past 12 months.

"Medium- to low-end housing projects located beyond the city's Outer Ring Road grabbed the top 10 spots for best selling projects over the past week," said Lu Qilin, a Uwin researcher. "Our study found that 8 of the 10 projects were sold for an average price of below 20,000 yuan per square meter."

The supply of new homes released to the market also fell slightly from the previous week. A total of 217,000 square meters of new homes were launched in the local market for sale during the seven-day period ended Sunday, a weekly drop of 3.8 percent, according to Uwin statistics.

China last Friday asked commercial banks to set aside more capital from lending for the third time in five weeks as the government stepped up efforts to tighten liquidity amid rising inflation. The reserve requirement ratio for lenders on the mainland will rise by 0.5 percentage point from next Monday, according to the People's Bank of China.

"Developers will probably face pressure amid tightened liquidity," said Song Huiyong, research director at Shanghai Centaline Property Consultants Ltd. "It is unclear how long such moves may affect them."