To buy or not to buy, that is the question. While most people prefer to wait for more solid signs of a bottoming-out before entering the property market, some aggressive and cashed-up investors brave enough to risk buying in the fourth quarter last year may now be enjoying a considerable capital gain. Although the first batch of bargains might have been snapped up, the performance of luxury homes in the first quarter might give investors a hint as to when to enter the market if prices retreat. Despite the 7.8 per cent year-on-year slump in Hong Kong's gross domestic product in the first quarter - the most severe quarterly contraction since the Asian financial crisis in 1998 - the average price of luxury flats on Hong Kong Island rose 6 per cent during the period, with the Southside outperforming with 14 per cent growth, data from Savills shows. Clarence Chow Ho-yin, a senior associate director at Centaline Property Agency, said transaction volume and prices in the district had been picking up since the beginning of the year. Deals shot up from 19 in January to 51 last month. Outperformers include Regalia Bay in Stanley and Hong Kong Parkview. A townhouse in Regalia Bay sold for HK$43.8 million or about HK$10,000 per square foot in January, but just a month later a comparable unit went for HK$12,000 per square foot. In Hong Kong Parkview, a 1,295 square foot unit was sold at HK$7,800 per square foot at the beginning of the year; by April a comparable unit fetched HK$9,422 per square foot, a 20.8 per cent climb. Looking ahead, Mr Chow believes Hong Kong Parkview will have better growth potential in the medium term. 'When even a new project in North Point asks for more than HK$10,000 per square foot, I believe the current prices at Hong Kong Parkview - which is a traditional luxury project - will be attractive for buyers,' he said. Mr Chow added that current prices were half way to the peak of HK$20,000 seen in 1997. Ada Ng Siu-ling, an associate sales director at Centaline, said prices in Mid-Levels West had rebounded 10 to 15 per cent from the trough in the fourth quarter along with growing transaction volumes. Outperformers in the area included Robinson Place and Grand Panorama, Ms Ng said. A unit on the 37th floor of block two sold for HK$7,014 per square foot in November last year. A unit one floor below sold for HK$8,689 per square foot this month, or a growth of 23.88 per cent, according to Land Registry data. Meanwhile, Grand Panorama on Robinson Road recorded a 27.05 per cent climb in the past five months. A unit on the 32nd floor in block three went for HK$8,633 per square foot last month; a similar-sized unit fetched only HK$6,795 per square foot in December. For the medium term, Palatial Crest on 3 Seymour Road and Centre Stage on Hollywood Road would have the greatest growth potential, she believes. Palatial Crest trades at about HK$7,000 per square foot while Centre Stage comes in at about HK$8,000 per square foot. These prices are far below the average of HK$11,000 to HK$13,000 achieved last year. 'The projects are popular among foreign tenants for their proximity to the Central business district,' Ms Ng said, adding the projects would offer good yields once the market recovered. Victor Chan Wah-sing, an assistant sales director for Mid-Levels at Centaline, said that in the area, luxury property transactions climbed from 30 deals in January to 39 deals last month, while deal values surged 43.14 per cent to HK$730 million from HK$510 million. 'Banks were extremely cautious on home loans in the fourth quarter last year. Buyers could at most get only a 50 per cent mortgage on a property of more than HK$20 million, even if they had secure jobs,' Mr Chan said. However, he said increased flexibility by banks over loans since the beginning of the year had stimulated the market. Mr Chan, who is upbeat on the growth potential for four-bedroom units in the district in light of the growing demand but limited supply on the market, named Garden Terrace, Clovelly Court, as well as units above the 20th floor of Estoril Court on Garden Road, as his top picks. However, Koh Keng-shing, a managing director of property consultancy Landscope Realty, believes the transaction volumes are not sustainable because of lingering concerns about the deteriorating economy. Also, the lack of investors in the market - because they anticipate falling rents - would drag down volumes and prices. 'On average, I expect property prices to stay flat compared with last year,' Mr Koh said. He added that rents had dropped 10 per cent so far this year and would fall by 20 per cent before bottoming out next year. Mr Chow also believes the market will stagnate in the short term, especially if owners offer either less room for negotiation or seek higher prices.