A seemingly unyielding "wait-and-see" approach among potential home buyers might depress the local housing market for a bit longer, industry insiders said Tuesday.

"The market is still rather weak, and it might not be able to regain its strength as quickly as we had seen in previous years," Xue Jianxiong, head of research at Shanghai Youwin Real Estate Information Services, told Shanghai Daily. "Usually March is the month when transaction volume would begin to pick up quite significantly after the traditional slack January and February when Spring Festival usually falls."

During the recent Shanghai Spring Real Estate Exhibition, a reliable barometer for the market, visitor numbers fell by around five percent to some 76,000 people whereas on-site transaction volume fell by more than 30 percent to about 200 million yuan (US$28 million).

Meanwhile, statistics showed that a total of 369,200 square meters of new homes, excluding those designated for relocation, were sold in Shanghai in the first two weeks of March, down 39.7 percent from a year earlier.

Though the volume increased 33 percent from the first half of February, its growth rate accounted for about one-fourth as compared to same period in 2007 when it soared by 121 percent.

An over-stretched purchasing power, especially in the second half of last year, represented by record-high transaction volumes and prices, together with tougher macro-control policies introduced by the central government, could be the major reason behind the current weak market, according to industry insiders.

However, a low transaction volume doesn't necessarily mean a cut in prices. Several projects have been offered at higher prices recently.

A project in Gubei, the traditional high-end residential area in the city's southwestern Changning District, has recently been launched at an average price of 35,000 yuan per square meter whereas last April it was around 23,000 yuan per square meter. And the asking price for two residential projects in Minghang and Nanhui districts also increased by more than 20 percent compared to several months ago.

Average home sales prices in China's 70 major cities jumped 10.9 percent in February from a year earlier, compared with 11.3 percent in January, the National Development and Reform Commission said.

(Shanghai Daily March 20, 2008)