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Reality bite turns sour for realty in Shanghai

By Wang Ying (China Daily)
Updated: 2009-01-07 11:54

Potential home buyers visit an estate project in Shanghai. [Asianewsphoto]

The property market in Shanghai appears to be headed for worse times this year with no respite seen from the plunging sales in 2008.

A Shanghai UWIN Real Estate Research Center report showed that in 2008, only 8.97 million sq m of residential space changed hands in Shanghai, down 56.9 percent from that of 2007.

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Figures from property consultancy Savills indicated that in the first 11 months of 2008, turnover in the secondary market for residential properties fell 24 percent over the same period a year ago.

Despite the sharp fall in demand as potential buyers are opting to sit on the sideline, sellers were slow in slashing prices to boost sales.

"It looks odd that Shanghai's average sales price only slid by 4.2 percent during July and November last year, while the sales volume shrank by more than half," said Albert Lau, managing director, Savills Property Services, Shanghai. The city's average housing price has held steady at around 9,000 yuan per sq m in October and November.

"The residential sales volume will not pick up as long as the average transaction price remains at current levels," added Lau. Without an average price drop of between 15 to 20 percent, the residential market would continue to languish in 2009, Lau said.

Others are more hopeful. Michael Klibaner, head of research with real estate service firm Jones Lang LaSalle, Shanghai, feels that housing prices have stabilized somewhat in the last quarter of 2008 after the government introduced various stimulus measures.

"Last September, 776,000 sq m of residential homes were sold, but the sales jumped to 1.284 million sq m in December, an increase of 65 percent," Klibaner said.