A few property advisory firms expect home prices to trough from next year to 2010.

Further from now, accordingly, mass market prices will fall 20-25 percent and luxury prices will decline in the range of 15-20 percent.

To put it simply, a square foot selling at HK$8,000 before September is now worth HK$6,400.

By the end of next year, it will probably slide by 20 percent to only HK$5,100.

This means that we are only midway through a housing lump - a dire fact that many of the industries, developers and estate agents alike, have conceded.

With a handful of residential projects hitting the market this month, developers are grasping the last-minute chance to sell by the end of the year.

Employing "close-to-marketprices" tactics, they are willing to slash prices to parallel the secondary market.

In the first couple of weeks last month, second-hand home sales were up over 50 percent on a monthly basis.

End-users largely dominated the market as home prices continued to fall. However, the momentum quickly lost steam since a number of "market-priced" projects went on sale in late November.

On similar price levels, secondhand homes never can rival brand new flats in the same marketplace. I mean no offense, but it seems quite idiotic that some home sellers instantly lifted the asking prices after a developer had trumpeted better-than-expected sales in a new residential block just around the corner.

New flats can draw on better mortgage terms offered by banks, warranted valuations and broader sales network via estate agents. It is one thing for homebuyers to be flocking to show flats, totally another to haggle with sellers, reluctant to cut prices, over worries about down-valuation and further price falls.

Everything just boils down to demand and supply.

The purchasing power of a large chunk of homebuyers has been dried up by the drastic surge in new supply. A drastic drop in f lat-hunting activity already explains how new home sales draw homebuyers away.

In a bull market, demand outstrips the new supply, which in turn spills over to the secondary market and helps buoy secondhand home prices within the same locality.

But in bearish times, when prices of new flats dip close to that of the secondary market, individual home sellers only can cut prices to compete.

It took some eight years for the housing market to recover after the 1998 storm. But for a tsunami? Hardly anyone can tell how long its effects will linger.

The author is deputy managing director of Vigers Asia Pacific Holdings

(HK Edition 12/17/2008 page3)