HONG KONG: Hong Kong home sales fell to the lowest level in eight months after the government expressed concern over potential asset bubbles and took steps to cool surging house prices.

Sales slid 9 percent to HK$34.7 billion ($4.47 billion) in December from November, according to the Land Registry. The number of transactions dropped 1.1 percent to 9,108 units from 9,213 units. Both sales and transaction volume almost doubled from a year earlier.

Many of the latest statistics showed a picture of a market cooling down.

The number of sale and purchase agreements for all building units received for registration in December was 11,112, down 0.7 percent compared with November.

The total consideration of sale and purchase agreements in December was HK$42.9 billion, down 10.5 percent compared with November.

Among the sale and purchase agreements, 9,108 were for residential units, down 1.1 percent compared with November, while the total consideration for these deals was HK$34.7 billion, down 9 percent compared with November.

Home prices jumped about 30 percent in 2009, prompting Chief Executive Donald Tsang to warn of a possible property bubble. To offset this, the government raised the minimum down payment required for luxury homes and suspended mortgage insurance for rental properties in October.

"The property market has shown adjustment since October," said Buggle Lau, chief analyst for properties at Midland Holdings Ltd, adding, "The recent land auction has had a positive impact on the market's sentiment, and home transaction volume will gradually rebound in coming months."

Sino Land Co and K Wah International Holdings Ltd bought two waterfront sites in Hong Kong's New Territories for HK$10.4 billion at auction last week.

New mortgage loans approved fell 11.1 percent in November from October, the Hong Kong Monetary Authority (HKMA) said last week.

The city's de facto central bank warned of "sharp corrections" after speculative "hot money" flooded in from abroad. More than HK$640 billion has flowed into Hong Kong since October 2008, HKMA Chief Executive Norman Chan said last month.

Hong Kong's home prices are likely to rise this year as the city's economy recovers, Lau said.

Retail sales rose by the most in 16 months in November.

Hong Kong's economy grew 0.4 percent in the third quarter from the previous three months, while shrinking 2.4 percent from a year earlier.

China Daily/ Bloomberg News

(HK Edition 01/06/2010 page4)