Sales of new homes plunged 56 percent to 3.57 million square meters in Shanghai during the first half of this year as government policies launched since mid-April to curb housing speculation have damped buying sentiment.

The six-month volume, excluding those designated for relocated residents under urban redevelopment plans, was the lowest registered over the past five years, according to Shanghai Uwin Real Estate Information Services Co, which started to track the local new home market since 2006.

"The latest tightening measures are definitely the toughest of its kind ever introduced by the central government and they slashed home sales," said Lu Qilin, a researcher at Uwin. "However, the average price continued to be above 20,000 yuan (US$2,950) per square meter during the six-month period as large-scale price discounts (by developers) have not started."

Between January and June, new homes in Shanghai were sold at an average 21,008 yuan per square meter, compared with 14,198 yuan per square meter in the same period a year earlier, Uwin statistics showed.

In mid-April, the central government raised the down-payment requirement on second-home mortgages to at least 50 percent from 40 percent. The State Council, China's Cabinet, issued a notice directing banks to suspend loans to those buying third and more homes to rein in speculators.

In its latest effort early last month, Chinese authorities said banks should consider both the creditworthiness and home purchase records of people applying for mortgages. It was the first time home buying records were included among the lending criteria.

New home sales might improve in the second half as more real estate developers, who have been suffering very sluggish sales over the past two and a half months, may finally decide to offer price discounts to replenish capital, analysts said.

In June, new home sales surged 35 percent to 420,000 square meters after hitting a low of 310,000 square meters in May, according to Uwin.