Upgrade demand has shown signs of revival, following developers' decision to stop undercutting the secondary market to sell new projects and halt sales schedules, say agents and analysts. Even though the segment remains relatively inactive, experts say it could see strong growth once confidence in upgrades is restored in the wake of an improved economy, assuming they play an important role in stimulating demand. Jonas Kan, equity research director of Daiwa Institute of Research said instead of generating demand, developers' earlier price cutting would have eventually destroyed it. Fortunately, the developers' change in strategy had prompted the market to return to 'normal', he said. Firmer and higher prices in the primary market would help secondary market transactions and stimulate upgrade demand. 'The demand that could be unleashed by upgrade demand from existing owners could be significant.' Middle-income earners are relatively inactive in the housing market compared to transactions for low-end flats. Figures from Centaline indicate the number of registered transactions of homes worth less than $2 million rose to 2,470 last month from a low of 1,754 in March. Sales and purchase agreements for apartments worth between $2 million and $3 million registered only 258 last month compared with 269 in August. There were 192 deals in March. In properties valued at $3 million to $5 million, there were 181 deals in September against 157 in August. In March, the number of deals was 111. Mr Kan said problems such as negative equity, an unclear economic outlook and uncertainty over job security remained factors weighing down buying desire among middle-income earners. But Centaline Property Agency chairman Shih Wing-ching said the number of negative equity owners only accounted for about 10 per cent of existing owners. According to Midland Realty, the estimated number of negative equity owners had droppedto 130,000 from the 150,000 following a 10 per cent rise in property home prices. 'Upgraders ... have defered their purchases amid a market slump,' said Mr Shih.