"The shrinkage in transaction volume is clearly indicative of the waitand- see atmosphere that currently prevails in the market." -- THE THIRD QUARTER MARKET REVIEW OF CB RICHARD ELLIS

Though Shanghai property buyers still feel a pinch when purchasing a house, Shanghai has continued to be the only one of 70 major Chinese cities sampled to experience a decline in home prices in the third quarter of this year, according to government statistics released Wednesday.

The average price of houses in that period rose 5.5 per cent from the same period of last year. Shenzhen's prices rose 12.8 per cent, the fastest in the country, followed by Beijing and Dalian.

However, prices in Shanghai went down 2.8 per cent in the second quarter and 1.1 per cent in the third.

Property experts attributed the price drop to the huge increase in the number of low-cost houses in the suburbs.

Transaction volumes in Shanghai's residential pre-sales market continued to hover at a low level during July and August after experiencing a sudden drop in June, according to the review.

The monthly average number of sales in July and August was 14,532 units with 1,254 sold within the inner ring road area, a 20 per cent and 39 per cent decrease respectively, compared with the monthly sales rate in the second quarter.

Due to cooling policies in the third quarter, especially the curbs on foreign investment in China's property market, the number of residential properties priced above 20,000 yuan (US$2,500) per square metre declined in July and August.

A total of 171 units priced at more than 20,000 yuan per square metre were sold, only 34 per cent of the average monthly level in the previous quarter.

The average price of luxury apartments and luxury villas rose by 2.1 per cent and 2.6 per cent to US$3,288 per square metre and US$4,132 per square metre respectively.

"The shrinkage in transaction volume is clearly indicative of the wait-and-see atmosphere that currently prevails in the market," said the third quarter market review of CB Richard Ellis, a world leading property consultant.

The total stock of unsold new housing in Shanghai reached 16.21 million square metres by the end of last month, with 77 per cent of high-end houses not affordable for ordinar y citizens, according to the statistics provided by the Shanghai Housing,Land and Resource Administration Bureau.

Meanwhile,the transaction volume in the past 10 months was 12.14 million square metres and the whole year's transaction volume is expected to be less than 16 million square metres.