HONG KONG, April 11 -- The government curbs and the U. S. Fed's tapering have cast a pall on Hong Kong's housing market, dampening demand and dragging transactions to a 23-year low.

According to Centaline Property Agency, during the first quarter of the year, the number of real estate contracts fell 11 percent quarter on quarter to 13,973 deals, the lowest level in 23 years. Sales totaled 88.64 billion HK dollars (11.42 billion U.S. dollars) during the period, plunging 30.1 percent from the previous quarter.

"The big slide in home transactions was within market expectation," said Patrick Chow Moon Kit, head of research for Ricacorp Properties.

He said the imminent interest rate rise, worries over Brazil housing bubbles and the government's tightening measures all account for the slide. "Additionally, the Spring Festival period is traditionally the off-season for the property market."

SLUGGISH MARKET

Amid the waning demand, some developers started offering new flats at 10 to 20 percent below those in the secondary market. In one example, Sun Hung Kai Properties last month sold flats at its Riva development in Yuen Long at 7,600 to 12,400 HK dollars per square foot, up to 45 percent below list prices when the project was first launched in March last year and also 15 percent below second hand home prices in the area.

The secondary market didn't fare well, neither. "In the secondary market, it was a much weaker picture, as falling new flat prices attracted customers to the primary market," said Wong Ching-yi, deputy chairwoman of the Midland Holdings.

She said that six real estate brokers competed for one deal in 2012. Last year, more than 10 brokers scrambled for one deal. "The situation will become even worse this year," Wong added.

Data from Centaline showed that new flat sales dropped to 3,549 deals during the first three months, down 8.5 percent from the previous quarter and sales of second-hand houses slid to 6,535 deals, the lowest level since the third quarter of 1995.Wong's view was echoed by Centaline Property Agency executive director Louis Chan Wing-kit.

He said that nearly half of small-sized real estate agents in Hong Kong have shut down during the first quarter. "I expect the number of Centaline's brokers will fall to around 2,800 in the middle of the year from 4,000 at the beginning of last year, and that half of the city's brokers may switch to other jobs."

PRICES TO FALL

In a bid to cool the runaway property prices, the government took a series of measures in February last year, including doubling stamp duty on properties worth more than 2 million HK dollars and introducing buyers' stamp duty -- the 15 percent tax on purchases by companies and non-permanent residents.

The special stamp duty imposes a levy of up to 20 percent on those who resell their flats within three years, compared with the previous 15 percent levy on sales within two years.

"Due to these measures, bubbles have already been squeezed out of the market," said Louis Chan Wing-kit.

Besides the cooling measures, the government also pledged to supply 20,000 new flats a year for 10 years to tackle soaring housing inflation, which fueled social discontent.

Institutions and analysts were generally unoptimistic about the future property prices, as they believed that imminent interest rate rise and the exit of liquidity from the banking system would weigh on market sentiment.

Reports issued by Standard & Poor's, Standard Chartered and Barclay forecast housing prices to fall by 10 percent this year; Midland's Wong also expected to see a 5 to 10 percent retreat in housing prices.

RELAX MEASURES

The government said last week there was no urgency to continue the "Hong Kong property for Hong Kong people" scheme, which was introduced in 2012 to reserve selected new homes for the city's residents.

Chief Executive Leung Chun-ying said that the program was a pilot scheme and would be used only when the property market was overheated. The market has cooled down as the number of buyers from outside Hong Kong had dropped to a low level.

Leung's words also aroused speculation as to whether other tightening measures will be relaxed. Patrick Chow Moon Kit from Ricacorp Properties said he agrees that the "Hong Kong property for Hong Kong people" scheme could be suspended as the imposition of double stamp duty and buyer's stamp duty have achieved the affect desired by the government.

"The recent decline in property buying by non-locals is largely due to other tightening measures instead of the scheme. I think the scheme can be suspended, while other measures should stay to ensure prices will not run out of control," he said.