SALES of pre-owned homes in Shanghai soared to a record last month as sellers and buyers panicked and sealed deals to avoid having to pay a 20 percent capital gains tax on profits from property sales.

More than 67,500 units of pre-owned homes were sold in March, the highest monthly volume booked in the city, Shanghai Deovolente Realty Co said in a latest report.

The sales last month surged 365 percent from February.

"The central government's latest decision to levy a 20 percent capital gains tax sent a shudder through the market while March was also the time of the year when property transactions often picked up," said Liu Wuyang, Deovolente's vice president of operation. "We expect market sentiment to cool off in the coming months following extremely hot sales over the past few weeks."

On March 1, the State Council, China's Cabinet, unveiled several new measures to rein in property speculation, which included tough enforcement of the capital gains tax.

The measures caused the city's inventory of pre-owned homes for sale to fall from around 140,000 at the start of March to about 127,000 as of Sunday morning, according to market data.

Meanwhile the average cost of the homes dipped 0.6 percent month on month to 17,013 yuan (US$2,709) per square meter.

Over 35 percent of the pre-owned homes sold last month cost between 1.2 million yuan and 3 million yuan, while nearly 20 percent were priced from 600,000-900,000 yuan, Century 21 China Real Estate said in a separate research.

Besides, Shanghai's pre-owned housing index rose for the 10th consecutive month in March amid record sales.

The index, which monitors price movements of pre-owned homes in the city, gained 45 points, or 1.72 percent, from February to 2,661 last month, the Shanghai Existing House Index Office said.

Across the city, prices rose in 128 of the 130 tracked areas in March by an average 1.73 percent from February, according to the office.