PRICES of new properties in Shanghai dropped by 10.7 percent last week from a week earlier, after consecutive policies were issued to adjust the overheating property market, Oriental Morning Post reported today.

Last week, the transacted volume of new properties, including apartments, villas, budget homes and office buildings, totaled 4,110 units, up 3.9 percent from a week earlier, while the average housing price dropped by 10.7 percent to 8,394 yuan (US$1,053) per square meter.

Average apartment prices slumped by 10.5 percent to 8,216 yuan per square meter last week, with 3,232 units sold.

The central government unveiled a string of new policies to dampen the flow of overseas capital into the red-hot property market. Foreigners won't be allowed to buy homes or apartments in China until they've been here for at least a year.

These polices may influence the transaction volume of luxurious properties inside the Inner Ring Road in the period, which decreases the average housing price.

Apartment sales inside the Inner Ring Road dropped by 42.3 percent, while housing prices rose 5.2 percent in the period. The sales of apartments between the Inner Ring Road and the Outer Ring Road rose 20.5 percent, with prices decreasing 7.1 percent.

The State Administration of Taxation also said last week that it will finally enforce a longstanding 20 percent capital-gains tax on the sale of second-hand residences starting from tomorrow, which set back some investors and is expected to influence the number of property transactions in Shanghai.