New home buying momentum plunged in Shanghai last month as tightening measures launched by the local government to cool the overheated market proved effective.

The area of new residential properties sold, excluding government-funded affordable housing, dived 56.1 percent from March to 972,000 square meters in April, Shanghai Centaline Property Consultants Ltd said in a report released today.

"The latest batch of rein-in measures has left an immediate impact on the local housing market since its implementation effective March 25," said Lu Wenxi, a senior manager of research at Shanghai Centaline. "Buyers' interest has been seriously damped with medium to high-end segments suffering the largest setback."

According to data compiled by Centaline, some 122,000 square meters of new homes with a price tag of 50,000 yuan (US$7,707) per square meter and above were sold last month, accounting for 12.6 percent of the city's total, which was a decrease of 3.5 percentage points from March.

The structural shift consequently led to a fall in average price. New homes sold last month cost an average 32,636 yuan per square meter, a month-over-month drop of 1.3 percent.

On the supply side, tightening policies including a higher minimum down payment for second-home buyers and a higher eligibility threshold for non-local residents to buy a house encouraged real estate developers to launch more units to the market to boost sales. More than 1.13 million square meters of new homes were released to the local market in April, a rise of 31.3 percent from March, Centaline data showed.

(Source: ShanghaiDaily  Author: Cherry Cao)