Hong Kong's home sales posted the biggest drop by volume in almost nine years, as local lenders have tightened mortgage lending amid economic slowdown, according to government statistics.

The Land Registry's latest figure showed that the number of residential unit transactions dropped 58.1 percent to 4,719. The number slumped 22.3 percent from September. This was the largest annual drop since November 1999 and the fourth straight month of declines.

By value, sales of residential units dropped 62.9 percent from a year earlier to HK$16.3 billion, and fell 13.1 percent compared with September.

The statistics announced by the Land Registry was a delayed figure reflecting the real market condition in September. Louis Chan, an executive director at a local property agency Centaline, said the November statistics should be more dismal.

Since the collapse of Lehman Brothers, banks are reluctant to lend. "Home buyers have difficulties in borrowing mortgage loan since in September and the situation deteriorated in October," Chan said.

Describing September as a "transition period" of property market, Chan said: "The financial turmoil sent the property prices down by 10 or 20 percent, it was so sudden." Banks also have difficulties in property valuations as the home prices slumped too fast, he added.

The economic outlook, coupled with declines in the Hong Kong stock market, has curbed demand for real estate and led potential buyers to expect cheaper prices.

Home prices on Hong Kong Island, which houses some of the world's most expensive apartments, had their biggest weekly drop in the week ended Oct 19, according to figures compiled by Centaline Property Agency.

Hong Kong stocks witnessed a black October with the benchmark Hang Seng Index slumping 22.47 percent, the worst in 11 years.

Centaline's Chan noted that the negative effects caused by the heavy losses in stocks will be reflected in the home sales figures in the coming month, so an even worse figure is expected in November.

He said chances for a slight market recovery are slim. And this will be reflected in the Land Registry's figures in December.

(HK Edition 11/05/2008 page2)