Average home prices in Shanghai dropped 5.87 percent last week from a week earlier to 9,696 yuan (US$1,309) per square meter, according to E-house China R&D Institute.

Property prices, including residences and offices, dropped 8.44 percent in the period to 7,971 yuan per square meter, the institute said.

"Growing transactions of low-priced homes pulled down the average price," said Xue Jianxiong, head of research at Shanghai Youwin Real Estate Information Service Co Ltd.

Total transactions dropped 10.98 percent last week to 290,800 square meters, the institute said.

"Many buyers failed to gain a mortgage because some commercial banks have used up the year's quota, which reduces transactions," Xue said.

Meanwhile, fewer new properties hit the market, also helping to pull down transactions, Xue said.

Average housing prices in Shanghai rose 7.9 percent last month from a year earlier. Prices of new homes in the city grew 8.3 percent in October and second-hand home prices rose 8.9 percent, the National Development and Reform Commission said last week.

The country has issued a string of policies to cool down the real estate boom, such as tightening credit to developers, increasing supervision over land use and enforcing tax policies.

Last month's average housing price in the mainland's 70 major cities jumped 9.5 percent on a yearly basis, compared with September's 8.9-percent growth rate.

(Shanghai Daily November 22, 2007)