When Jennifer Jiang and her husband strolled past the sales office of Star River in Pudong's Huamu area on a recent Sunday morning, the couple was jarred by the hurly-burly in a neighborhood accustomed to peace and quiet.

"We were astonished by all the noise and the glut of parked cars everywhere," she said. "Then we discovered the cause. A luxury housing project in the neighborhood was having its grand opening."

The couple, who moved to Huamu about four years ago from Shanghai's downtown Luwan District, were even more aghast by all the hubbub when they looked at prices ranging between 10 million yuan (US$1.46 million) and 30 million yuan a unit.

The Star River developer claimed that a majority of its 322 units had been booked by buyers on the first day they went on the market.

As of Tuesday, 232 Star River apartments had been sold at an average price above 50,000 yuan per square meter, according to the city's official housing website, which tracks both new and existing home sales.

The luxury housing market in Shanghai started its boom in March this year. Analysts attribute the surge mainly to the government's relatively loose macroeconomic policies and an increasing investment need to park cash in real estate as a hedge against inflation.

Developer Greentown China said all the units of its Bund House, a luxury housing project in the downtown Huangpu District, were sold out on the opening day. The 86 units, each of more than 300 square meters, were selling at an average price of 17 million yuan each. Contracts for 53 units were signed as of this week.

"Sales of high-end residential projects across the city started to pick up at unprecedented pace since March, with no signs of easing all the way through August," said Lu Qilin, a researcher at Shanghai Uwin Real Estate Information Services Co.

According to Uwin, 7,448 square meters of new luxury homes, each priced at more than 40,000 yuan a square meter, were sold across the city in March. In April, the figure more than doubled, and in the first 20 days of August alone, the number had skyrocketed 13-fold. The prices of new homes in the week ended August 16 soared a record 17 percent to almost 20,000 yuan a square meter.

"Shanghai's residential market has gone from strength to strength in the past six months in both take-up and price, both in the new and existing home markets," said Albert Lau, executive director for Savills China. "The high-end of the market has performed particularly well, with prices up some 20 to 30 percent in this period."

This apparently insatiable appetite for property investment has helped soak up excess inventories left over from the property market slump. Concerns that the government may soon take action to cool down the market have been eased by official statements that the loose monetary policies will continue as part of economic stimulus measures.