Home sales dropped nearly 30 per cent last month, with analysts predicting the worst is yet to come.
According to the Land Registry, 4,534 flats changed hands in March, a 28.1 per cent drop from February.
Total property transactions, which include residential and non-residential properties such as offices and shops, fell 29.1 per cent month on month to 6,841, the lowest in 13 months. Those transactions were valued at HK$44.4 billion, 24.9 per cent short of February's total and 40.7 per cent below the March figure last year.
Centaline Property Agency research head Wong Leung-sing said he expected total property transactions to fall below 5,000 units this month as the fallout from the new curbs was felt.
"The decline in transactions [for March] reflects the slow sales during the Lunar New Year period from February 10. It does not reflect the impact of the doubling of stamp duties announced at the end of February," Wong said.
On February 22, the government doubled stamp duties on properties worth at least HK$2 million, and last month some big banks in the city raised their mortgage rates.
HSBC, Standard Chartered, Hang Seng Bank, Bank of East Asia and Bank of China (Hong Kong) raised mortgage rates to between 2.4 per cent and 3.5 per cent. Banks such as Dah Sing, Wing Lung and China Construction Bank have, however, held their rates at 2.15 per cent.
The Land Registry figures did not break down the home sales but, according to Centaline, homes sales on the secondary market fell 31.8 per cent last month to 3,214 units, the lowest level in three months. In the primary market, 1,067 units were sold, down 9.7 per cent month on month.
Wong said the number would continue to drop. "Sales of second-hand homes [in April] will have fallen to the 3,000 level when the official figures are announced next month."
According to Midland Realty, 24 flats were sold at 10 major housing estates during the Easter holidays from March 29 to April 1 - a 61 per cent drop compared with the previous Easter season.
The Centa-City Leading Index, which tracks 100 major housing estates in the city, fell slightly by 0.18 per cent to 123.45 for the week to March 29 from the preceding week, reflecting the transaction trend two weeks after the new stamp duty took effect.
The index has climbed 6.6 per cent so far this year, according to a research note by Jefferies. The investment banking firm expects the market to moderate as homeowners are willing to sell at a 5-10 per cent discount.
Secondary market pricing pressure should persist while developers increase discounts for new homes, according to the Jefferies report.
As investment activity had decreased substantially, investors in the high-end market might need to take a deeper cut to book profit, the report said.