The Hong Kong Monetary Authority's move to tighten requirements for second mortgages is expected to slow sales of older homes but is unlikely to trigger a significant price correction, according to property agents.
Midland Realty expects the number of transactions in the secondary residential market could tumble by 11 per cent to 16,000 in the fourth quarter.
The latest mortgage lending policy would deter buying interest from investors with limited budgets while plans by developers to speed up new property launches would lure buyers away from previously owned flats.
"Home prices however will edge up 3 to 5 per cent as the third round of quantitative easing measures in the United States prompts inflation," said Buggle Lau Ka-fai, chief analyst at Midland Realty.
"It will lure capital flow into the property market as a way to hedge rising inflation."
Some flats are continuing to sell at record prices.
Yesterday, a 585 square foot flat in Taikoo Shing in Quarry Bay, one of the most popular residential developments, sold for HK$5.78 million, or HK$9,880 per sq ft.
Another 692 sq ft flat at Nan Fung Sun Chuen, also in Quarry Bay, changed hands for HK$5.6 million, or HK$8,092 per sq ft.
Centaline Property Agency, which handled the transactions, said both deals were record prices for units of that size in the two estates.
Because of the strong sales response from Henderson Land Development's Double Cove in Ma On Shan over the weekend,
Centaline said about 10 per cent of owners in the district either raised their asking prices for properties on sale or held back from selling in hopes of a further increase in home prices.
In the luxury home market, two flats with a total floor area of 5,219 sq ft at Regence Royale in Mid-Levels were sold for HK$139 million or HK$26,595 per sq ft, according to the Land Registry.
The buyer is Judy Lau, the sister of Jim Lau Jin-wei, the former chairman of Global Green Tech.
However, some vendors have lowered their prices or sold their flats at a loss after the government foreshadowed additional measures will be introduced if prices continue to rise.
Hong Kong Property Services Agency said a 1,636 sq ft flat at Celestial Heights in Ho Man Tin sold for HK$21 million, against the HK$25.84 million the owner paid in May 2008.
"The flat has been on the market quite some time and only secured a buyer after the launch of QE3," said Steven Yung, sales manager at Hong Kong Property Services Agency's Kowloon luxury home unit.
In addition, a 939 sq ft flat at Laguna City in Lam Tin sold for HK$6.75 million, which was below the HK$6.8 million asking price.