About 3.1 million square meters of gross floor area were sold in Shanghai's primary housing market in the first quarter, the highest level in two years.

In the first quarter, the city's new-home sales remained robust, growing 119 percent year-on-year to reach 3.1 million sq m. The transaction prices of new homes rebounded to an average of 23,300 yuan ($3,762) per sq m in the first quarter, data released by international real estate service provider Savills China showed.

Meanwhile, the secondary market outperformed new-home sales with around 6.5 million sq m of gross floor area sold in the first quarter, a surge of 219.8 percent year-on-year. Transaction prices in the secondary market edged up 5.5 percent to 16,800 yuan per sq m year-on-year.

Zhang Lin, senior manager at Savills China, said the transaction volume is expected to see a temporary decline in the next quarter as homebuyers rushed to complete their deals ahead of the implementation of the new tightening policies, which will include levying a 20 percent income tax on home sales.

Although there are no indications of looser housing regulations, a significant number of developers polled by Savills China remain confident toward the mid-term prospects of the property market.

Robust end-user demand and affluent cash flow from offloading inventories are also expected to ensure a positive future for developers in the remainder of the year.