(Yicai Global) April 12 -- Shanghai’s housing market recovered markedly in the first quarter of the year, according to new figures.

Twenty-three of 43 housing projects in the city that kicked off presales in the three months ended March 31 were sold out on the first day, according to data from the Shanghai research center of the China Real Estate Information Corporation.

Buyers entered the market at a faster pace after February partly because of relatively fewer new projects in the market earlier this year, but as the number of potential buyers increased pent-up demand started to appear, said Lu Wenxi, a market analyst at Shanghai Centaline Property.

Fewer housing projects and apartments were up for presale in the quarter than a year earlier, confirmed Yang Yulei, chief analyst at the Shanghai Lianjia Research Institute. But by the middle of this year, the estimated new supply will exceed the same period in the previous two years, she noted.

Despite the expected uptick in supply and sentiment falling from a peak in the second half of March, Lu said April’s turnover will remain in a reasonable range because the market is still quite active.

“Market expectations for the economy this year are generally optimistic,” Sheng Xiuxiu, head of the residential housing market research department at Jones Lang LaSalle China, told Yicai Global.

Shanghai will continue to attract more talent thanks to its sound fundamentals and positioning as a national economic center, so its real estate market will probably perform well this year, Sheng said.

Secondary Market Rebound

As new home sales recovered, Shanghai’s second-hand housing market also rebounded strongly in the quarter, with turnover reaching a 20-month high in March, data from Centaline showed.

The volume of trading in second-hand homes was higher than the market expectated, said Lu. “Twenty-thousand second-hand homes a month is a threshold for Shanghai’s property sector, and a figure higher than that indicates the market has turned hot.”

A total of 19,280 pre-owned residential properties were sold in February, almost the highest since last July, while the figure hit 23,991 last month, according to Centaline’s data.

Secondary housing market transactions will turn active as soon as buyers believe house prices are no longer falling, according to Sheng. With improving sentiment, pre-owned home prices in Shanghai may start to climb in the second half, Sheng predicted.

Editors: Tang Shihua, Futura Costaglione