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SCMP Reporter

Strong second-hand home sales are expected to fuel another good run for the property market this year, according to Midland Realty (Holdings).

The property agency  expected property sales to jump 22 per cent to an eight-year high of $430 billion,  with 135,000 transactions,  chairman Freddie Wong Kin-yip said yesterday.

Sales last year totalled $351.78 billion in 123,480 transactions, according to Land Registry figures.

Mr Wong  projected  secondary market sales  to constitute 80 per cent  of the overall number of  transactions this year, up from 74.8 per cent  last year and 87.4 per cent  in 1997, the historic peak  of the property market.

'We have already seen a sharp rebound in  secondary sales amid  a widening price gap between the primary and secondary markets,' Mr Wong said.

'However, we believe the segment still lags  the primary market, and there is 15 per cent upside on the average pricing of the sector.'

The price gap between the primary and secondary markets   widened to 28.3 per cent  last year from 4.7 per cent in 2003, according to the agency's research.

'Some developers have been holding back first-hand residential units, prompting a fall in supply in the primary market,' Midland executive director Vincent Chan Kwan-hing said. 'This has boosted  demand for second-hand apartments.'

Residential projects completed over the past three years would be the market darlings,  Mr Chan said.

SK Pang Surveyors managing director Pang Shiu-kee  agreed with Mr Chan,  saying it was a normal market development as both buyers and investors were looking for laggards.

Meanwhile, Mr Wong noted that the property rally  had attracted more speculators to jump into the market recently. Nonetheless, he   said possible  interest-rate  increases this year would help prevent the market from overheating.

'A mild rate  increase is unlikely to dampen overall market sentiment. Instead, the market will become healthier,' he said.

Midland's shares rose 3.72 per cent to $4.175  yesterday.



Second-hand flats seen fuelling next rally