Home sales in the secondary market have plunged to historical lows, hit by increased mortgage rates and developers' competitive pricing strategies on new developments that have lured home seekers away from the second-hand housing sector. With buyers sidelined as they await clearer pricing signals, analysts and property agents believe demand will not pick up again until prices in the mid- to mass housing markets fall by 10 per cent or so, and by more in the luxury sector. "There have been only three transactions in Taikoo Shing so far this month," said Kenneth Chiu, assistant sales manager for Centaline Property Agency's Taikoo Shing branch. "It is even worse than the 20 deals done during the Sars scare," he said, referring to the outbreak of severe acute respiratory syndrome in 2003. Average transaction prices in the estate are around HK$11,852 per square foot. The slump comes as the secondary market wrestles with a "double-whammy" of increased mortgage rates and sweeteners offered by developers to help shift units in newly released projects. The fresh challenges follow on the doubling of stamp duty payable by buyers of second homes introduced last month. Hongkong & Shanghai Banking Corp, the local unit of global banking group HSBC and the city's biggest home lender with total residential mortgages of HK$686 billion as at December 31, took the lead in raising its rates on new home loans by 25 basis points to between 2.85 per cent and 3.15 per cent, from between 2.6 and 2.9 per cent. The variation depends on borrowers' credit records. Standard Chartered, Hang Seng and Bank of East Asia followed with similar rises. "The housing market is entering a turbulent period," said Chiu. Besides a landslide in sales of luxury homes, districts like Tin Shiu Wai where average transaction prices were HK$4,400 per sq ft for the area's most active housing estate, Kingswood Villas. Hong Kong Ferry's Green Code project in Fanling has sold 350 flats since it was launched last week. Byrant Man, a sales manager at Ricacorp Properties Tin Shui Wai branch, said five flats changed hands in the district last week versus seven transactions per week in a normal period, despite discounting by sellers. "Individual home owners have cut their asking prices by three per cent but potential buyers remained on the sidelines awaiting further cuts." Buyers in the area are typically first-time home buyers who are more sensitive to interest rates and prices, he said. No deals were recorded in 20 of 50 housing estates according to records monitored by Ricacorp Properties for the week ended March 17, and total sales amounted to 65 versus 62 the previous week. Falling secondary market deals and higher commissions on new home sales have prompted agents to turn their attention to marketing new homes. Adrian Ngan Wai-hung, an executive director of Citic Securities' real estate equity research department, believes developers will be forced to cut selling prices by five to 10 per cent before home seekers are lured back to the market. "And it will take a bigger cut to sell flats priced above HK$10 million," he said. Patrick Wong, associate director of property research at BNP Paribas Securities, said he expected developers "to adopt flexible pricing strategies".