Shanghai's benchmark index for second-hand housing prices dipped by 0.6 percent last month from August, the biggest drop in the downward trend over the last four months.

The index, which tracks the prices and transaction volumes of Shanghai's second-hand housing market, lost 11 points to 1,689 in September, according to the Shanghai Existing Property Index Office.

The index started to decline for the first time after five years of continuous growth in June following the government's measures to rein in speculation.

The Pudong New Area, which has seen a 2.4 percent price drop in September on a monthly basis, led the price slide across the city. It was followed by Zhabei District with a monthly drop of 2.2 percent.

"The prices of second-hand houses in Jinqiao, Shangnan Liuli, Sanlin and Pengpu, all of which are in the peripherals of Pudong and Zhabei, have been adversely impacted by new projects in the same area," the report said.

"These new launches have offered aggressive promotions to attract potential buyers who are now holding tightly to their pockets. This has weakened the price appeal of second-hand houses in the same area."

The average price in the Liuli area in southern Pudong, close to the venue where the 2010 World Expo is to be held, declined by 4.0 percent to 8,314 yuan (US$1,025) per square meter last month, the biggest drop among the 52 areas in the 11 districts the report covered.

Among the few areas that have seen rising prices against the downward market at large, Huahai Road reported the highest climb of 1.7 percent in prices last month to 12,850 yuan a square meter.

The rental rates for houses in the inner city dropped slightly due to a growing supply last month. The monthly rental of houses in Dapuqiao and Laoximen areas declined by 3 percent while two-bedroom apartment in those areas dropped as much as 10 percent over the previous month.

(Shanghai Daily October 18, 2005)