(Yicai) July 4 -- Sales of second-hand homes in Shanghai surged to a three-year high last month thanks to further policy easing to prop up the real estate market, with the most sought-after houses those priced up to CNY3 million (USD412,500) and over CNY10 million (USD1.4 million).

After the Shanghai government relaxed its property market policy at the end of May, searches for homes costing less than CNY3 million jumped more than 30 percent, Zhang Bo, president of 58 Anjuke Research Institute, told Yicai. Most buyers were young, with limited budgets and high requirements for their surroundings, Zhang added.

Sales of pre-owned homes costing more than CNY10 million also climbed, according to the manager of an outlet of a large real estate agency in a high-profile residential area in downtown Shanghai. Most of the buyers were well off and wanted to improve their living conditions, he noted.

Some 26,374 second-hand homes were sold in Shanghai in June, up 41 percent from May and 103 percent from a year earlier, data released by real estate market research platform Shanghai Lianjia Research Institute showed yesterday. Daily sales exceeded 1,000 over six days.

A senior local industry insider told Yicai that even more pre-owned homes could have been sold, but heavy rains in Shanghai during the last week of the month crimped sales.

On May 27, Shanghai became the first Chinese first-tier city to pare mortgage rates in the wake of the People's Bank of China easing national policy, cutting the minimum rate for first-time buyers to 3.5 percent from 3.85 percent and that on second homes to 3.9 percent from 4.25 percent. It also trimmed the downpayment on first and second homes to 20 percent and 35 percent from 30 percent and 50 percent, respectively.

A young man with a non-resident household registration who works in Shanghai told Yicai that after the restrictions on buying a house in the city were lifted, he paid the deposit for a second-hand property costing about CNY2.9 million in the first week of June. "I liked the location very much, and the price was affordable, so I bought it,” he said.

An agent in downtown Xuhui district told Yicai that there is only one home that costs less than CNY3 million left for sale in the residential area where he works.

The pre-hand properties that have recently sold were mainly priced from CNY3 million to CNY4 million, noted Song Hongwei, research director of Tospur Research Institute. They are smaller, cost less, and in good locations, according to Song.

After an earlier price drop, the rent-to-sale ratio of these properties exceeded 2 percent, and the long-term return on investment has become attractive again, Song noted.

Since most pre-owned homes priced in excess of CNY10 million have been listed for sale for some time, owners no longer seek unreasonably high prices, with most buyers also having waited for a long time, the store manager said, adding that with the launch of new policies, the time has come for the two sides to make quick deals.

With the increase in sales, the price of second-hand homes in Shanghai also stabilized in June, 58 Anjuke's Zhang pointed out. Although the actual prices of pre-owned houses was slightly lower than in May, the space for bargains has shrunk a lot, Zhang said, adding that the market will remain attractive, with deals likely exceeding 20,000 again this month.

In addition to the significant rebound in sales, other important indicators of Shanghai's second-hand property market also picked up month on month, Li Gen, senior manager of Lianjia's business strategy department, said to Yicai. The number of new realtor stores rose 10 percent, that of new customers jumped 15 percent, and that of guided viewings jumped 25 percent, showing that confidence is bouncing back, Li pointed out.

Editors: Tang Shihua, Martin Kadiev