Recent data shows Hong Kong property buyers are quick to pick up a bargain. As home prices come under pressure due to internal and external factors, transactions have risen, especially in the luxury sector. According to Knight Frank, transactions for homes of more than HK$10 million increased by about 50 per cent last month. A house at Regalia Bay, with an asking price of HK$80 million, was sold for HK$68 million, which was a 15 per cent discount. A high-floor flat at The Harbourside was sold for HK$34 million, about 6 per cent below the asking price. The international property consulting company notes that individual investors willing to lower asking prices were mainly those holding several units or those who had experienced losses in the stock market. End-users, generally enjoying low interest rates and have strong holding power, were reluctant to sell their flats at a discount, while the job market and the local economy remained healthy. With housing demand persisting and rents continuing to rise, there were still record-breaking sales. 'The problem of a shortage of residential units will not be solved in the short term. Interest rates are low and rents have continued to rise. Property owners are reluctant to sell their flats at a discount. Even if there is an adjustment, a slight discount of 5 per cent to 10 per cent will be enough to attract buyers with holding power and investors who are looking for an outlet,' says Thomas Lam, head of research at Knight Frank in Greater China. Given the strength of Hong Kong's economy, the cause of any pessimistic forecasts can only be a political one. The market is cautiously waiting to see if there are any housing policy changes in the next policy address, especially as a new chief executive takes over next year. Investors are delaying decisions, while the views of market experts vary from boom to bust. The market has yet to form a clear sense of direction and the tug of war between rentals and sales in the luxury sector is expected to continue. It is unclear how the luxury rental market will react to lay-off plans recently announced by several financial institutions. According to Lam's estimate, price fluctuations in the rental and sale of luxury properties will be within a range of 5 per cent and things will stay murky until early next year. According to data compiled by Midland Realty, rental yields went down, while property prices soared early this year. That said, rental yields remained at an appealing 4.3 per cent in the low-interest environment. Last month, the average rent rose 1.3 per cent to HK$20.9 per square foot, the highest since September 1997. The recent hikes in the mortgage rate for the Hong Kong interbank offer rate will make it harder for some prospective buyers. But increasing inflationary pressure will push rents up and provide an incentive to buyers looking for stable income. 'Property prices have shown a slightly downward trend. Buyers are now more cautious and fewer tenants are looking to buy than before. The market is watching closely the economic development of the mainland. If Beijing continues to tighten its monetary policy and take measures to cool down the property market, it may have an impact on capital flow,' says Buggle Lau, chief analyst at Midland Realty. Transactions have declined because buyers are divided over the market outlook, Lau says. It is also a result of the government's cooling measures since last year. Midland's data shows that sellers are more open to offering a discount of between 5 to 10 per cent after the downgrade of the United States credit rating in July. Since then, transactions have bounced back to 4,000, indicating a strong buying sentiment. Lau says the outlook depends on two factors - the global economy and government policies. While the former remains uncertain, the latter is more predictable. The government has stressed that its measures are designed based on the economy and its goal is to stabilise the property market.