While the stock market's rollercoaster ride steals the limelight, the housing market in Shanghai and neighboring cities is quietly enjoying a revival.

 

Latest statistics show that trading on the Shanghai housing market in May hit highs for the last two years after both the central and local governments introduced new policies in a bid to bring down skyrocketing property prices.

 

After trading volumes in the first and second weeks of May were the highest since 2005, trading in the third week exceeded 700,000 square meters. That milestone was quickly outstripped by the expanded trading of 808,100 square meters in the last week of May.

 

Total housing sales in Shanghai reached 2.66 million square meters and 21,848 flats in May, up 34 percent and 31 percent respectively over the previous month.

 

Local analysts predict more growth in June.

 

Most apartments sold in May were in the 700,000-800,000 yuan category - meaning they're either secondary housing or new apartments in the outlying areas of Shanghai, where housing projects are shooting up rapidly.

 

Long queues of buyers outside some new housing projects hitting the market, including some in the relatively remote Baoshan District, clearly represent revived enthusiasm.

 

Though May is often regarded as a busy season in the housing market, a relatively low supply has spurred frenic trading.

 

In fact, some analysts have cautioned that low supply on the market could spark another round of price hikes in the coming years.

 

Some local property developers have been accused of hoarding apartments and delaying opening sales to speculate on higher prices.

 

The new round of housing relocation resulted from old town renovation, which slowed down in the last two years and has brought new buyers to the market.

 

The local government, worried about rising costs for relocating families, has sped up the displacement process, according to analysts.

 

The average cost of relocating a local household has gone up to 700,000 yuan, from 400,000 yuan in 2005 and 200,000-300,000 yuan in 2004. The cost is expected to grow.

 

(China Daily June 6, 2007)