Home prices will rebound by up to 15 per cent this year as market sentiment turns around on last month's successful land sale and Government measures to stimulate economic recovery, says Vigers Hong Kong. But the office market will remain quiet with investors likely to stay on the sidelines amid concerns over 5.6 million square feet of office space becoming available in the next two years, the company says. Vigers chairman Gareth Williams said the GDP growth figure of minus 5.7 per cent for the last quarter of 1998 had improved slightly from the previous quarter's minus 6.9 per cent. 'If such growth continues for two more consecutive quarters, we believe the property market will rebound gradually by 10 per cent to 15 per cent before the end of the year,' he said. In its latest quarterly property market review, Vigers said sentiment in general had improved considerably because of several factors, including the proposed Cyberport and Disney projects. Interest rates were cut during the quarter and banks started to compete aggressively for mortgage business, it said. Mr Williams said a sudden increase in residential prices would not be seen, given abundant supply. This year's home supply, including unsold units from last year, might reach 40,000, the highest level since 1989, Vigers said. Mr Williams expects the secondary market to be more active at the end of the year, but believes it will continue to be dominated by the primary sector. Vigers said the average price of mass residential properties in the secondary market remained about $3,600 per sq ft, almost unchanged from the end of last year. Luxury home prices climbed 8 per cent across the board over the previous quarter and were standing in the range of $4,900 per sq ft to $6,800 per sq ft, it said. 'Although a significant upsurge in prices is unlikely in the short term, the luxury market will be able to support a 10 per cent increase by the end of the year,' director David Lindsay said. While the sale market was firming, rentals for luxury residential flats dropped by 3.7 per cent during the last quarter, with the hardest-hit being Mid-Levels, which slipped 6.5 per cent and Island South, down 4.1 per cent. In the office sector, Vigers expected landlords to be firmer on rents and leasing terms after market sentiment had improved. Office sales slowed slightly, with transaction volume falling to 120 from 128 in the previous quarter. About 42.5 per cent of transactions were in the core business district, reflecting a reasonable and affordable price level in that area for end-users. Office prices in Central fell 3.6 per cent in the quarter, indicating the sale market was stabilising. Meanwhile, office rentals dropped by between 9.6 per cent and 20.6 per cent from the previous quarter, under pressure from oversupply on Island East. In the retail sector, Vigers expects to see rents and prices continue to rise in view of improved sentiment. Retail prices increased 6-28 per cent while average rentals lifted by 9-29 per cent during the quarter.