Defaults on Hong Kong home sales agreements remain low for the moment - but if the market slowdown deepens the number of buyers walking away from contracts could grow significantly by the second quarter of next year, property experts have warned. Concerns have been raised by the big increase in property releases in the pipeline, with 5,000 pre-sold flats ready for delivery between April and June next year. Property consultants said developers of the new flats and houses could find that growing numbers of buyers might over-extend themselves and then walk away from uncompleted deals if prices continued to tumble. Home prices have so far dropped about 8 per cent on average from a peak reached in the first quarter of the year, and analysts expect values could continue to fall by another 30 per cent. Buyers who put down between 10 per cent and 30 per cent of purchase prices as deposits could find that when the time comes to take transfer of their homes they will still owe more than their homes are worth if they completed the purchases. In the circumstances, some might consider forfeiting their deposits and walking away from the deals, analysts said. 'It is likely that this will happen, since the housing market is not expected to recover before the end of 2009,' said Alva To Yu-hung, the director of the research department at property consultant DTZ. He did not expect home prices to bottom out and stabilise until 2010. Buyers caught in this predicament who did not respond by walking away from agreements could also choose to sell the units at below purchase price in order to cut their losses, Mr To said, with the extra supply driving prices further down. According to DTZ, about 5,000 units in new projects are scheduled for completion in the second quarter of next year. New completions on the way include the Capitol in Tseung Kwan O, Celestial Heights in Ma Tau Wai, the Palazzo in Ho Man Tin, One Pacific Heights in Sheung Wan, Island Lodge in North Point, and York Place in Wan Chai, according to estate agents. Ricacorp Properties research manager Patrick Chow Moon-kit said a small number of defaults in both the new and secondary markets had already occurred. But agents said the number was so far insignificant since only a few new projects had been released. In addition, some developers had extended delivery dates so that buyers did not need to complete their purchases at the moment. Projects to be completed or recently completed include Harbour Place and the latest phase of Residence Bel-Air in Pok Fu Lam. Agents said the occupation date of the latest phase of Residence Bel-Air had been delayed to next month from the end of last month. Ricky Poon Wai-ki, a director of residential sales at Colliers International, said buyers in the project had paid between HK$13,000 and HK$14,000 per square foot, but in the meantime average prices of Residence Bel-Air in the secondary market had fallen to less than HK$11,000 per square foot. 'Many buyers may exit from the deals when the development is completed and owners are required to complete their purchase agreements and move in,' he said. In the secondary market, buyers are required to complete purchase agreements within two months, while buyers in new pre-sale projects enjoy a longer transaction period until the projects are completed. 'That's why so many investors are attracted to new projects even though they cannot afford it because they hoped to sell the units before taking delivery,' Mr Poon said. Mr Chow said the result was that a number of investors were now on the verge of walking away from deals against a background of tighter credit conditions and rising interest rates. 'If the global financial market continues to worsen, or we see another big financial institution going bust, I would expect to see defaults becoming a major phenomenon next year.'