Resales of Home Ownership Scheme (HOS) flats hit a 12-year high, as new entrants to the housing market turned to the government-subsidised units because of sharp increases in private sector property prices. Centaline Property Agency research shows the transaction volume of HOS secondary market sales reached HK$1.52 billion last month, the highest since a November 1997 peak. A total of 960 HOS flats were sold in the secondary market in February, up 168 per cent from 358 units a year ago, and continuing the strong growth in sales recorded last year when all five HOS estates recorded sharp increases in prices and transactions. The prices of units in Siu Hong Court in Tuen Mun, one of the most popular HOS estates, hit HK$2,450 per square foot in January, the highest in 10 years. The prices at which HOS units changed hands in the secondary market last month ranged between HK$1,900 and HK$2,200 per square foot, the Centaline data shows. The average price was less than HK$1,800 per square foot in August last year. The prices of deals done in the remaining four HOS estates, meanwhile, reached two-year highs. Property agents expect transaction numbers and prices to increase further once the Housing Authority releases new measures to revitalise the HOS secondary market. The authority said last month it was considering waiving the land premium or allowing it to be paid in instalments when flat owners sell their property in the secondary market. Currently, owners who bought their flats from the authority have to pay a land premium if they resell them in the secondary market unless the buyers are tenants of public housing estates. As their prices are far below those of private homes, there is increasing interest in HOS flats from end-users and investors, agents said. Siu Hong Court and Sui Wo Court in Sha Tin are the two most popular HOS estates as sellers need not pay any land premium. This is because Siu Hong Court is more than 20 years old and Sui Wo Court is one of the oldest estates. Siu Hong Court is also well-located. The estate is next to the Siu Hong MTR station on the West Rail Line connecting Tuen Mun and Hung Hom. 'It is the cheapest housing estate along the railway lines,' Centaline senior sales manager Jacky Yeung said. 'It is difficult to find a flat in a large-scale housing estate with an entry price of less than HK$2 million.' The estate attracted end-users from Kowloon and Hong Kong Island and investors, Yeung added, and sales were strong recently after Sun Hung Kai Properties launched Yoho Midtown in Yuen Long at an average of HK$5,500 per square foot after the Lunar New Year. Prices at Siu Hong Court are at least 60 per cent lower than that of Yoho Midtown. A 588 sq ft unit at Siu Hong Court costs about HK$1.24 million or HK$2,109 per square foot. A 503 sq ft unit at Yoho Midtown has a price tag of HK$2.82 million - enough to buy two flats at Siu Hong Court. 'We found that an increasing number of buyers at Sui Wo Court came from Kowloon in recent months,' Roy Choi, a district manager at Centaline, said. Some of them were interested in Jubilee Garden, a private housing estate in the area, he said. However, the entry price of the estate was close to HK$2.5 million, which was beyond their budget. Also, the efficiency rates - or the amount of usable space that goes into the pricing formula - of HOS projects are higher than those in private housing. The efficiency rate of Sui Wo Court is 90 per cent, while the rates for new housing estates are 65 to 80 per cent. Choi said buyers found it not worthwhile to spend a lot of money in a unit with a lower efficiency rate. 'HOS projects are more attractive to them.' Buying an HOS flat is one way that new entrants to the housing market may reduce their entry-level price. But increasingly they are facing competition from investors attracted by the fact that HOS prices have lagged gains in the private sector, Yeung said. Yeung estimates 20 per cent of the buyers at Siu Hong Court are short-term investors. 'An investor bought a 583 sq ft flat at the estate for HK$1.08 million last October and resold the unit for HK$1.23 million in January after renovation,' he said. As many as half the buyers at Sui Wo Court in recent months were investors, Choi said, compared with only 20 to 30 per cent in the middle of last year. 'They saw the upside potential of the estate,' he said, adding that the average price there surged 25 per cent since early last year, with gains of about 15 per cent from November last year to February this year.