Home sales in Hong Kong posted a fourth consecutive weekly gain last week as buyers were lured by the falling price.

Transactions at the city's ten major private residential projects rose to 44 in the week that ended Nov 23, the number was 39 a week earlier, said Centaline Property Agency, one of the city's biggest real estate brokerages.

Wong Leung-sing, an associate research director at Centaline, said end users see the latest price drop as a good opportunity to get into the market. He expects more transactions for low-end properties in the coming weeks.

The city's property market is badly hit by the sharp losses in the stock market and the worsening economic outlook. Home prices have fallen 22.4 percent since they reached a near 10-year high in March, according to Centaline figures.

The proportion of transactions for apartments priced at less than HK$2 million rose to a 14-month high of 58.4 percent in the first 20 days of November, according to Centaline. The ratio was 55.3 percent for the whole of October.

Patrick Chow, head of research at Ricacorp Properties, said the falling property prices have attracted buyers thinking long-term investment.

The rental yield is picking up due to the falling residential property prices, Chow said. Currently, the average yield at 50 major residential projects rose to 5.37 percent, compared with a 4.56 percent average yield in March, when the property prices peaked.

Chow noted that the average price slumped 22 percent since March to HK$3,912 per square foot, while the fall in rents is comparatively mild, an average of the 50 residential projects is HK$17.5 per square foot.

"Investment with return of 5 percent should be quite attractive amid the financial turbulence," he said.

Chow noted that apartments priced at less than $2 million are most popular among the investors.

Due to the uncertain economic condition, some potential buyers may postpone their plan and rent a flat, bolstering the rental demand, Chow said.

As the financial market remains volatile, some investors may prefer to buy a flat with around 5 percent rental yield, he added.

He expects property prices to stay flat after hitting the bottom, but rents are unlikely to come down substantially. "The rental yield of mass residential units can stay at 5 percent for the short term," he said.

(HK Edition 11/27/2008 page2)