Price increases and economic concerns put paid to buying interest and rebound Home sales plummeted last month to their lowest level since December last year as the high-pricing strategies of developers and landlords, coupled with economic uncertainty, dampened buying sentiment. Centaline Property Agency estimated that registered sales of first-hand flats valued at less than $20 million tumbled 34 per cent from April to 1,020 deals. The figure represents just 25 per cent of the 4,132 deals - a 12-month high - achieved in October last year. Sales of secondary flats lodged with the Land Registry fell 12.3 per cent from April to 7,500, giving a May total of 8,520 transactions, Centaline said. The Land Registry will announce May's official transaction figures this week. Its figures are seen as a reflection of market activity in the preceding month because of a four-week lag between transaction and registration. Property agents said sales had not rebounded despite a stronger than expected response to the government land auction on May 25. Ricacorp Properties managing director Ivan Ho said developers had slowed sales and increased prices, resulting in a dramatic decline in first-hand transactions, while talk of interest-rate rises and uncertainties over the mainland's macroeconomic outlook had also put a damper on the housing market. Mr Ho said he expected the Land Registry to report only about 7,000 deals for this month. Shih Wing-ching, chairman of Centaline (Holdings), which controls Centaline Property Agency, said residential sales rebounded a few weeks ago because developers had been willing to cut prices. 'However, developers cut back all discounts and incentives after the land auction. As a result, sales plummeted,' he said. The property market slowdown has had knock-on effects. Estate agents which expanded rapidly in the wake of the dramatic improvement in home prices have been slashing expenses to improve their balance sheets. Mr Shih said: 'I estimate 50 per cent of our shops made losses in May.' Centaline Property Agency has recruited an extra 400 sales representatives and managers for its residential department since September last year. Ricacorp Properties, another unit of Centaline (Holdings), employed an extra 200 staff during the same period, and Midland Realty (Holdings) and its subsidiary Hong Kong Property together employed an extra 808 staff. None of the agents said they had plans to lay off staff or reduce branch networks because they had an optimistic outlook for the housing sector in the medium to long term. However, Centaline and Ricacorp said they had been cutting down on advertising to control operating costs. The slowdown has also affected agents specialising in the luxury end of the market. Landscope Realty managing director Koh Keng-shing said its focus in the next few months would be on leasing activities as sales transactions had slowed recently while leasing inquiries had surged. He said more expatriates were coming to Hong Kong as multinational companies expanded their offices in the city.