(Yicai) June 18 -- Shanghai’s daily sales of second-hand housing surged to the highest in three years at the end of last week after the metropolis became the first city in the country to trim the minimum interest rates on mortgages last month to spur demand, industry insiders said.

Some 1,184 pre-owned homes changed hands in Shanghai on June 15, according to the latest data.

Sales in the first half of June were double that of the whole of May, the branch manager of a large real estate agency in the city told Yicai on June 16.

Daily sales surged more than 40 percent in the first 16 days of June from before the floor rates were lowered to an average of 800.5 apartments a day. An average of 818.3 apartments were sold each day between May 27 and June 14, according to a research note from Guosheng Securities.

And sales continue to climb, with more than 1,000 apartments changing hands on June 14 alone. The new measures could boost sales for up to half a year.

In the week June 10 to June 16, there were two days when property sales topped 1,000 units and sales have stayed high since the policy was released, said Lu Wenxi, a market analyst at Shanghai Centaline Property. This is more than when similar stimulus policies were released in September last year.

On May 27, Shanghai cut mortgage interest rates after the People’s Bank of China eased its housing policy on May 17. The city trimmed the minimum rate on first-home mortgages to 3.5 percent from 3.85 percent and that on second-home mortgages to 3.9 percent from 4.25 percent. It also reduced the minimum downpayment for first and second home purchases to 20 percent and 30 percent from 35 percent and 50 percent, respectively.

However, the increased sales are not driving up prices. Some landlords did try to raise prices after the new policy came out, but these houses did not sell, realtors said. Most landlords are willing to negotiate in order to sell quickly.

Shanghai’s used apartment price index tumbled in May from the month before and from a year earlier, according to the National Bureau of Statistics’ figures of the housing prices in 70 cities that was released on June 17. This indicates that sales volume is more important than prices.

New properties are also selling well. Sales jumped 10 percent in the first two weeks since the policy was rolled out from the two weeks before it was released to 277,000 square meters, said Chen Julan, a senior analyst at China Index Academy in Shanghai,

As more new homes come onto the market in Shanghai and market sentiment improves, sales are expected to climb and the real estate market will improve, Lu said.

Editor: Kim Taylor