By Wang Zhenghua and Jin Jing
Updated: 2007-07-25 18:08

SHANGHAI: Property prices in the city rose 1.2 percent year-on-year in June, much lower than the average of 7.1 percent in the nation's 70 large- and medium-sized cities.

But industry analysts said the rate of increase, though small compared with double-digit jumps in Shenzhen, Beijing and other cities, was the fifth consecutive monthly rise since housing prices in Shanghai rebounded in February, indicating a sustained recovery in one of the world's hottest property markets.

Because of mild increases after a big decline early this year, "the prices of completed properties, as well as properties in the construction stage, have now come within investors' scope of consideration", said Lina Wong, managing director of Colliers International, a leading international real estate services firm.

She believes Shanghai's investment climate, as well as its status as China's financial capital, will continue to attract foreign and domestic investment to the property sector this year.

In efforts to rein in speculation in the industry, the local regulator has said it will enlarge the land supply in the second half of the year to provide more small apartments.

Latest figures released by the National Development and Reform Commission indicated that prices for new apartments in Shanghai climbed 0.9 percent last month, while the growth for pre-owned apartments was 1.2 percent.

Figures provided by the local real estate industry association suggested that new apartment prices maintained a steady growth of 0.3 percent between January and June over a year ago.

"Local investors and foreign institutional players remain highly interested in participating in Shanghai's economic growth, as long-term property investors continued to support record levels of investment transactions and valuations that even just a few years ago would have seemed incomprehensible," Wong said.

"The overall market has demonstrated strong resistance to impacts from market-curbing measures."

"Luxury apartment sales rebounded in second quarter, ending on a strong and optimistic note, said Kenny Ho, head of research of Jones Lang Lasalle's Shanghai office. "Sales for some high-end properties were recorded as three times higher than last quarter. With limited new units on the way, luxury prices on the secondary market will experience more upward pressure."

To alleviate an inadequate land supply, which has pushed up bidding prices for parcels, the Shanghai Housing and Land Resources Administration Bureau plans to introduce a total of 10 million square meters of land for residential use in the second half of 2007.