Prices of small flats in the second-hand market have rebounded recently, with some units even changing hands at record highs. This contrasts with the growing number of luxury homes being sold at a loss, as that segment has been hit hardest by the property market cooling measures the government imposed 15 months ago. The rebound has prompted Patrick Chow Moon-kit, head of research at Ricacorp Properties, to revise upwards his forecast for home prices this year, from a drop of as much as 15 per cent to an increase of 5 per cent. Agents expect the sell-out on Saturday of the first batch of 591 flats at Cheung Kong's City Point in Tsuen Wan to encourage more home seekers to buy flats. "A 355 square foot flat at Serenity Park in Tai Po sold for a record HK$3.55 million last week. It surpassed the previous peak of HK$3.4 million in early 2014," said Anthony Man, a district manager at Centaline Property Agency. Kingswood Villas in Tin Shui Wai is one of the most popular estates for first-time buyers. "The minimum price for two-bedroom flats there was HK$2.4 million in March. But now you have to pay at least HK$2.65 million. Prices of three-bedroom flats also rose, from HK$2.9 million to HK$3 million, during the same period," said Lik Ma Sze-lik, a branch manager at Centaline. Agents said many owners of mass residential housing units were willing to cut their asking prices by only 1 per cent to 2 per cent since April, rather than 3 per cent to 5 per cent previously. By contrast, Chow said: "The demand for luxury flats remains weak. The average price at Imperial Cullinan in Tai Kok Tsui dropped from HK$13,828 per square foot [in terms of gross area] in March to HK$12,579 per square foot in April." Centaline's Centa-City Leading Index of mass residential property, which tracks prices at 85 housing estates across the city, fell just 2.33 points to 118.64 on May 25 from 120.97 in February last year, before the cooling measures took effect. Data from EPRC, a website that provides information on property transactions, shows six of the 10 most popular estates recorded a rise in property prices in April, compared with four in March. Analysts believe the rebound is mainly because of the shortage of small flats available for sale in the secondary market. There are about 50 flats at Kingswood Villas available for sale, compared with 200 to 300 flats before the measures were imposed. "Many flat owners are reluctant to sell their flats because of the special stamp duty. They have to pay a special stamp duty of up to 20 per cent if they resell quickly. They would have to sacrifice a significant amount from their profit to pay the tax if they sold their flats," said David Chan, a director at Ricacorp. Eddie Hui Chi-man, a professor of real estate at Polytechnic University, said: "Many flat owners don't think property prices will drop sharply in the short run. They would rather keep the flat for leasing, which offers a yield of 3 per cent." But Eric Yuen Chi-fung, the head of research at Guoco Capital, said interest rates are not the only factors affecting price movements. "The buying interest largely depends on the mainland economy. If the mainland's economic slowdown continues, it will dampen the buying interest."