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Estate agents predict a large-scale price correction at Mei Foo Sun Chuen in Kowloon where transaction levels have frozen following the stock market collapse.

 Tony Lui Man-chun, Ricacorp Properties' area manager, said that the development had seen only two transactions in the week since the stock market first fell on Thursday, October 16, down from almost 70 transactions in the first two weeks of the month.

 Mr Lui said some owners already have been adjusting asking prices by 10 per cent or more.

 'But I think prices can go lower still,' Mr Lui said.

 He said that reasonable asking prices for a typical 1,000-square-foot flat at Mei Foo have fallen from $4.9 million to $4.3 million, or almost 13 per cent.

 In the first half of the month, average transacted prices were about $5,300 to $5,400 per sq ft, but those figures should now be closer to $4,600 to $4,700 per sq ft.

 There also were a number of defaults among new purchasers last week, meaning transactions done in the first two weeks of October may not make it to completion.

 One purchaser of a $4 million unit defaulted on his $100,000 down payment because he had difficulty selling his old flat, Mr Lui said.

 'There were a couple such situations last week,' he said, adding this was an ominous indicator of things to come.

 So far, about 2 per cent to 3 per cent of the 1,000 units on the market have been discounted above 10 per cent.

 As owners became desperate to sell, average prices should fall further, he said.

 Mei Foo, developed by Mobil on a site once occupied by its petroleum terminal, is one of the first mass-residential housing projects built in the early 1970s.

 There are about 13,000 units in total at Mei Foo - between 620 sq ft and 1,900 sq ft in size - with the majority in the 900 to 1,000 sq ft range.

 Mr Lui said the rental market was becoming more active, with rents averaging $20 per sq ft.

 Indoor car-parking spaces cost about $500,000 while outdoor spaces go for about $400,000.

 Car-space rentals are between $2,200 per month and $3,000 per month.

 Because of its age, Mei Foo's facilities are not generally as good as those at newer developments, but it has a relatively active secondary market as the complex is located above the Mei Foo MTR station.

 Mr Lui said transaction levels a year ago were in the 150 transactions per month range, while prices were about $4,100 per sq ft.

 In the first quarter, when the property market was in its ascendancy, transaction levels were about 300 per month and prices had risen to about $5,700 per sq ft.



Market collapse set to hit Mei Foo Sun Chuen prices