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Hong Kong home sales last month slumped to their lowest in at least a quarter of a century, adding to evidence that prices have further to fall.

That is

according to data from Centaline Property Agency, which estimated January sales of new and secondary homes would reach 3,000 units, the lowest monthly figure since it started tracking data in January 1991. The previous low was 3,786 units in November 2008, according to a Jan 31 release.

"The Hong Kong residential market is all about sentiment," said Joanne Lee, senior manager of the Hong Kong research and advisory team at Colliers International Group Inc. "Falling stock-market prices, the economy weakening, the mainland's economy weakening and increases in the interest rate will all have an impact."

Hong Kong's property market has been showing signs of weakening since reaching a peak in September, amid a rising supply of homes and slowing growth on the mainland. Housing prices are down 9.5 percent from September, according to the Centaline Property Centa-City Leading Index and may fall another 20 percent in 2016, according to some estimates.

The tepid demand was pronounced in January as buyers traditionally delay making purchases in the lead-up to the Spring Festival holiday, which begins this year on Feb 8. In turn, many developers have delayed the launch of new projects until then. Sales in December were 5,294 units.

The drop was particularly sharp in the primary market, with an estimated 420 new units sold last month, down 80 percent from December's 2,127 units, Centaline said.

In order to encourage buyers, developers have been offering discounts and stamp duty rebates as well as second mortgages allowing borrowers to finance up to 90 percent of a home's value.

Henderson Land Development's Harbour Park mass-market development in Sham Shui Po district sold 15 units during January with discounts and rebates of up to 11 percent, out of a 60 units released so far, according to the company website.

Prices before discount ranged from HK$3.47 million for a 202 square foot apartment to HK$4.86 million for a 276 square foot one.

"If developers want to sell, especially for projects in the New Territories, they have to provide incentives to potential buyers," said Thomas Lam, senior director of valuation and consultancy at Knight Frank. "If they want to launch a new project they will have to offer more incentives than 12 months ago."

 Free fall fears as January home sales sink to lowest since 1991

Hong Kong's home sales hit a record low in 25 years in January. In order to encourage buyers, developers have been offering discounts and stamp duty rebates as well as second mortgages allowing borrowers to finance up to 90 percent of a home's value. Parker Zheng / China Daily

(HK Edition 02/02/2016 page8)