Local property transactions hit a 12-month low in July, according to new figures from the Land Registry.

There have been about 8,320 transactions this month - a 30 percent drop from the 11,876 units dealt in June.

The registry figures, provided by Midland Property, indicate that the monthly transaction count fell below 10,000 for the first time in a year.

And the value of the transactions have totaled just HK$29.9 billion this month, down from HK$57.4 billion in June.

Among the 8,320 transactions, 292 were in the primary market, and 6,757 were in the secondary market. That's compared with the respective June figures of 1,668 and 8,366.

For the entire first half of this year, the Land Registry recorded 75,300 property transactions - down 8.4 percent from the second half of 2007.

A Centaline Property report attributes the transaction decline to the equity market's collapse in May and June.

"The US and Hong Kong equity markets saw a bearish rally during the period. The lag effect is now surfacing in the property market," the report says.

Charles Chan, managing director of property valuation and professional services for Savills, predicted that the transaction volume will linger at a low level as potential homebuyers remain cautious.

"Overclouded by the unstable external economy, the transaction volume will keep shrinking in the months ahead," he said.

Bank of East Asia Chief Economist Paul Tang echoed Chan's view in saying the property-transaction decline is a sign that the market has entered into a correction period.

"Given that property prices have risen considerably in the past year, and coupled with the unfavorable economic conditions, (investor confidence) has cooled," Tang said.

And Chan said he thinks the property prices will stay steady in the second half, given the supply shortage.

Sellers are reluctant to drop the prices on their properties now, given the expectation that prices will rebound amid the shortage in new developments.

The Transport and Housing Bureau earlier announced that the completion of new flats in the first half was 1,600 units - the lowest since 2004.

(HK Edition 07/31/2008 page2)