China's most expensive property market has been deflating since June, when new taxes aimed at speculators halted a six-year boom during which prices almost tripled.
The slide may deepen as developers increase supply and demand wanes in a city where a typical new apartment costs more than 50 times the average annual income, China Daily reported from the eastern metropolis.
"Property prices in Shanghai have risen out of the reach of ordinary citizens," said Qiu Zhicheng, an analyst at Xiangcai Securities Co, who forecasts prices will drop 10 per cent in the coming year.
"It was only a matter of time until prices fell." Real estate has helped Shanghai's economy expand by 12 per cent annually since 1990. The city of 17 million people has built more skyscrapers in those 15 years than New York.
In Shanghai, a 100-square-metre new apartment costs an average of 914,000 yuan ($112,800 US), according to the Shanghai Real Estate Exchange.
That's 55 times last year's average disposable income of 16,683 yuan ($2,059). The People's Bank of China, the country's central bank, described Shanghai city's second-hand and luxury home markets as "bubbles" in a report issued in August.