Hongkongers bought 16 percent fewer homes on the mainland in the first quarter as the property market there is experiencing a correction, a new survey says.

They purchased somewhere between 5,400 and 6,000 mainland units during the period, according to property consulting firm Land Power International.

Despite that, total transaction value saw a 3.5 percent growth to 4.3 billion yuan, as buyers turned to more-expensive houses.

Michael Choi, chairman of Land Power International, believes Hongkongers will pour more money into mainland properties in the second quarter to take advantage of the yuan appreciation.

Choi predicted transaction volume will grow by 20 percent in the second quarter, year-on-year.

"Due to the implementation of the tightening control, Hong Kong buyers have become more cautious in investing in mainland properties," Choi said.

The average property price in Shenzhen has tumbled 25 to 30 percent from the peak. Choi expects that the market could bottom out in the second half, although he says the prices will suffer another 5 to 10 percent fall in the second quarter.

Nearly 30 percent Hongkongers said they're interested in buying mainland properties, according to a Land Power survey conducted in the first quarter.

Among them, 50 percent said they want to do so because of the rosy outlook of the mainland's property market, as well as the rising yuan.

Many Hong Kong buyers are borrowing money in Hong Kong dollars to buy mainland properties, so they enjoy exchange gains and the property boom.

Choi predicted property prices will edge up 1 to 2 percent in Shenzhen in the second half, and 2 to 3 percent in Guangzhou, while Shanghai property prices will pick up steadily with a full-year gain of 7 to 8 percent.

(HK Edition 04/24/2008 page3)