HONG KONG: Home sales slumped 24.3 percent in October from the previous month as developers launched fewer new projects, while soaring flat prices also discouraged many prospective buyers.

Residential transactions lodged for registration totaled 9,300 last month, down from 12,285 in September, latest figures from the Land Registry show.

In value terms, home sales for October plunged 35.3 percent to HK$36.3 billion, down from September received registrations of HK$56.2 billion, but 140% more compared with October last year.

The figures relate to transactions in September as there is usually a four-week time lag between closing a transaction and the lodging for registration with the Land Registry.

Cranes sprout from the top of residential blocks at a construction site. Bloomberg News

Year-on-year, home sales surged 97 percent in volume terms and 123 percent in value terms.

"Developers launched fewer new projects for sale in September compared with the previous two months, particularly in the luxury market," said Patrick Chow, research head at Ricacorp Properties Ltd, interpreting the figures.

Transactions of homes valued at HK$10 million or more fell 55 percent to 612 in October from 1,351 the previous month, according to the Land Registry.

The official figures do not provide a breakdown on the numbers of new and second-hand home sales.

But Chow said data compiled by Ricacorp shows that new home sales dived 59 percent while second-hand home sales fell only 18 percent during the period.

Data from another major real estate agency, Midland Realty, indicated a declining, yet reverse, trend.

"New home sales fell about 20 percent, while transactions involving second-hand homes dropped around 60 percent," Buggle Lau, Chief Analyst at Midland Realty, estimated.

Analysts also cited soaring property prices for the slowdown in transactions.

"Property prices have gained sharply since the beginning of the year. Many prospective homebuyers are finding it hard to chase the soaring prices," Ricacorp's Chow said.

"Homebuyers will stop for a while and watch for new developments," he said.

Midland Realty's Lau also noted the "aggressiveness" of homeowners in the pricing for their properties.

He expects sellers to gradually lower their asking prices as transactions slow down.

Hot money, low interest rates and relatively-small housing supply have sent local home prices soaring, with luxury market prices surging over 40 percent from the end of last year and topping peak levels during the last bubble period in 1997, with prices in the mass market also jumping, nearly 30 percent.

Both analysts expect the property market to slow down further, particularly given that the government has taken steps to squelch a potential property bubble, with Lau forecasting another 10 percent fall in the November figure from October and Chow seeing a 20-30 percent drop, which may be influenced by a recent tightening of mortgage requirements.

On October 23, the government raised the downpayment requirement for luxury homes costing HK$20 million or more from 30 percent to 40 percent, and warned last week that it may intervene if the property market becomes "unhealthy" and "unfair".

(HK Edition 11/04/2009 page4)