Prices have plunged by up to 50 per cent since October when Asia's financial turmoil swept over this former British colony, triggering a property and stock market crash. The once-proud residential sector is now in despair.

The lines of flat-hungry customers that used to form outside private developers' offices the night before sales opened have now been replaced by scores of clean-cut touts in suits.

Armed with brochures, these property agents mob passing cars and the thin trickle of walk-in customers.

"Want to buy a flat? We can give good terms and waive lawyer fees," one eager agent says.

The homeowner in despair Lee See-ming became a proud homeowner when he bought a 600 square-foot (55.8 square-metre) flat in Kowloon at the height of the market boom in mid-1997 for HK $3.5 million (US $500,000).

The car agent, whoneeds to pay a monthly mortgage of HK$23,000, has been told by his boss he will be laid off.

Thousands of people have been laid off in recent months as the regional crisis bites deeper. The unemployment rate of 3.9 per cent, while minuscule compared to other countries, is Hong Kong's worst in 14 years.

"I just can't afford it any more," the father of two said, cupping his head in his hands. "I think I will just stop payments and let the bank take over the apartment."

Lee, 36, has worked some 15 years and scrimped to have just enough to pay a 30 per cent down payment for his dream flat.

Now he brings his whole family back to his parents' home for dinner. "It's cheaper to cook for more people than to cook for just four," he said with a wry laugh.

Lee is not alone. There are hundreds like him, and many more with slightly different problems arising from the same cause.

"Dismayed homeowners" unite Hundreds of woeful homeowners have formed the "Hong Kong Alliance for Dismayed Homeowners" and stagedprotest marches to get the government to do more.

The alliance's spokesman Li Choi-wing bought a $4.1 million flat last year but its value has since crashed to $2.6 million.

"I've already paid $1.2 million for the down-payment. I'll have to pay an extra $800,000 if I take the mortgage offer from banks. Where can I find the money?" Li said. "It looks like I'll have to forfeit the $1.2 million down payment."

The government at fault?

Home prices have risen relentlessly in past years.

With cubby-holes costing easily up to US $1 million, Hong Kong people have long blamed the government for failing to rein in prices which made home ownership almost an impossible dream.

When leader Tung Chee-hwa took over in July after Hong Kong was handed back to China, he drew up plans to build 85,000 new flats each year for the next 10 years and pledged to raise home ownership to 70 per cent by 2007.

He put in place a scheme through which existing public housing dwellers could buy their flats at discounts ofup to 88 per cent on market value with mortgage backing of up to 95 per cent.

"The last straw scheme"

Under this Tenant Purchase Scheme, 25,000 public flats would be sold each year from about HK $60,000 each at far-flung places to about HK $350,000 each in central urban areas.

This scheme, coming at a time when the Hong Kong economy was at its most vulnerable, dealt the final blow, analysts say.

"This public housing scheme giving buyers huge discounts and generous lending terms have taken a core consuming market from the private property sector. The main driving force for the property sector is gone," said Ho Lok-sang, economics professor at Hong Kong's Lingnan College.

"When people see the government flogging all these flats at such prices, of course they will buy these flats. Who will buy private flats? It's a policy error," he told Reuters.

Columnist Fanny Wong said in the South China Morning Post: "What motivation is left for people to buy private property which costs millions ofdollars more?"

Ho deems the property crash in Hong Kong to be worse than an earthquake.

"Can you imagine the cost? Even a number eight earthquake in Hong Kong would not cause so much damage," he says.

"Each flat is losing at least a million (Hong Kong) dollars. You can tally the loss," he said. He estimated the total loss to homeowners, at least on paper, at tens of billions of dollars.