Homebuyers at a property expo in Shanghai. [Photo provided to China Daily]

Shanghai's preowned house transactions in December shrank 27 percent month-on-month to 13,300 units, the lowest in the past 25 months, as a result of a series of measures to cool down the city's residential property market.

A research note issued by the Shanghai Existing Property Index Office, which tracks transaction data of preowned housing properties, said that more than 66 percent of transactions of preowned homes were sold below 3 million yuan ($431,100) per unit, a signal that buyers' demand is shifting from speculative or investment-oriented to self-use.

"In terms of average prices, about 44 percent of communities with preowned house supplies saw prices rise slightly around 0.7 percent in December, while the other 56 percent reported prices falling about 1 percent, or remaining unchanged," the research note said.

The December data were a natural result of alignment with the overall trend following a buying spree in the third quarter of 2016 when the government announced a series of tightening measures to cool down the market. The city's residential home sales plunged, as mass market sales fell 50 percent quarter-on-quarter and high-end house sales down 29 percent quarter-on-quarter in the fourth quarter of 2016, according to data from real estate services provider JLL.

"New supply has fallen sharply, while developers' appetite for land fades. New supply in the mass market contracted 34 percent quarter-on-quarter as the government issued tightening measures. In the high-end segment, the quarter saw only two projects launch a combined 275 new units, representing a sharp decline of 76 percent from the previous quarter," said Zhou Jing, director of the residential property business arm of JLL in Shanghai.

However, upgraders' demand remained buoyant, preventing a steeper decline in sales momentum, with strong sales in newly launched projects.

Homebuyers said they feel that sellers of preowned properties are becoming more rational as they are more flexible and open to price negotiations.

However, the average prices of properties in key areas of Shanghai are still rising, albeit at a slower pace, and are unlikely to decline in the foreseeable future.