Secondary market sales of apartments costing HK$2 million or less fell 31 per cent month-on-month in April as potential buyers were deterred by a spike in prices, Midland Realty said.
There were 1,408 small flat transactions last month, down from 2,052 in March, which was the highest figure since last June.
'The decline can mainly be blamed on the fact that there are fewer cheaper units in this category. Overall, home prices have risen seven per cent since January,' said Buggle Lau Ka-fai, chief analyst at Midland Realty.
Prices for some housing estates such as City One in Sha Tin and Kingswood Villas in Tin Shui Wai have surged as much as 10 per cent since February, he said.
'As owners raise asking prices by five to 10 per cent in just a few short months, potential buyers are starting to take a wait-and-see attitude. In these circumstances, it makes it harder to do a deal.'
Lau said the fall in small flat transactions was in line with the broader market, with secondary market sales of homes in all price categories falling across the board.
According to Midland Realty data, the number of secondary residential transactions as of April 27 was 7,207, down 28 per cent from the whole of March, when 10,066 deals went through.
The Lands Department will release the official figure for April shortly.
Despite the fall, he said the number of deals for flats costing HK$2 million or less in April was still the second highest for the past nine months. Tsuen Wan Centre in Tsuen Wan registered 17 transactions priced at HK$2 million or less last month, making the housing estate the market leader in this category, followed by Sherwood in Tuen Mun and Kingswood Villas in Tin Shui Wai with 16 transactions apiece.
Richard Lee Chi-shing, chief executive of Hong Kong Property Services, said sales activity would remain flat this month unless new projects were released for pre-sale.
He said the outlook for the market would be clearer after the government granted pre-sale consent for two major projects - the 1,091-unit Century Gateway at Tuen Mun Station, a joint venture between Sun Hung Kai Properties and the MTR Corporation, and New World Development's 981-unit The Riverpark at the Ma On Shan Line's Che Kung Temple Station.
Sun Hung Kai Properties earlier said it hoped to launch Century Gateway at HK$10,000 per square foot.
New World Development expected The Riverpark to be launched within two months but did not disclose its target price range.