The secondary residential market has stalled with agents reporting decreases in transactions and prices in response to developers' cutting the price of new flats.
Estate agents said individual flat sellers had no choice but to reduce prices to compete with developers if they wanted to attract buyers.
Soon after Cheung Kong (Holdings) announced the coming sale of flats in Laguna Verde phase two in Hunghom at below market prices of $4,388 per square foot, agents said asking prices of second-hand flats in neighbouring Whampoa Garden dropped 5 to 10 per cent.
Midland Realty's Hunghom branch sales manager Ricky Lin Tat-fai said the Laguna Verde units' prices were lower than expected with some units selling for below $4,000 per square foot.
Secondary market activity in Hunghom contracted immediately in response to the launch, he said, adding that a Whampoa Garden unit was just traded at about $3,100 per square foot.
Mr Lin said many second-hand flat owners were hesitating over how to respond to Cheung Kong's competitive pricing at Laguna Verde, but had concluded that reducing asking prices seemed to be the only way out.
