THERE are signs of a recovery in the second-hand property market as the price for brand new flats stabilises and price differences between new and older properties narrow, estate agents say. Michael Choi Ngai-min, president of the Society of Hong Kong Real Estate Agents, estimated there had been a 35 to 40 per cent increase in the number of second-hand property transactions over the last couple of weeks. New projects launched in recent months had given the market confidence that home prices had bottomed out, he said. 'A lot of new properties have been selling very well, with developers able to continually increase the prices and still sell out,' Mr Choi said. At the same time, transacted prices for second-hand flats had fallen as much as 25 to 30 per cent since the height of the market last May, bringing them more in line with new properties which had been heavily discounted by developers. According to some estimates, second-hand home owners keen to sell their properties have had to cut their prices by as much as 13 per cent over the last three months to bring them more in line with prices charged by developers. But as second-hand owners wanting to sell their flats watched developers raise prices, they no longer saw any reason to cut their own, Mr Choi said. Jeffrey Ng, assistant manager with Midland Realty in Ap Lei Chau, said he had sold a couple of second-hand flats at the South Horizons development over the weekend to people who had originally come to look at brand new flats at The Oasis development nearby. Prices for the Hutchison Whampoa-Hongkong Electric flats were about $4,100 per square foot, while prices for the second-hand flats ranged from $4,200 to $4,300 per sq ft, Mr Ng said. With little to choose from price-wise, Mr Ng said home-hunters had bought the second-hand property because of the sea view and because they preferred the location. Both Mr Choi and Alex Wong, group general manger with L&D, cautioned, however, that recovery depended upon the location of the flats. Mark Noton, head of residential sales with Brooke Hillier Parker (BHP), said home-owners would still find it difficult to sell their flats if they were more expensive than new offerings. He described any recovery in the second-hand property market as 'fragile'. In the long term, prices for second-hand flats in the New Territories would not increase due to the large supply of such housing, said Mr Wong. The opposite was the case on Hong Kong Island, where little new construction was forthcoming soon. As long as demand remained strong, Mr Wong said he thought second-hand residential property prices would climb slightly during the next few months or so.