Nov. 4 (Bloomberg) -- Hong Kong's home sales posted the biggest drop by volume in almost nine years, as local lenders tightened mortgage lending amid a slowdown in the economy.

The number of residential units that changed hands in the city last month slumped 58.1 percent to 4,719, according to a Land Registry statement today. That's the largest drop since November 1999 and the fourth straight month of declines.

By value, sales of residential units dropped 63 percent from a year earlier to HK$16.3 billion ($2.1 billion).

The economic outlook, coupled with declines in the Hong Kong stock market, have curbed demand for real estate and led potential buyers to expect cheaper prices. The Hang Seng Index has dropped 48 percent this year.

Home prices on Hong Kong island, which houses some of the world's most expensive apartments, had their biggest weekly drop in the week ended Oct. 19, according to figures compiled by Centaline Property Agency Ltd.

``We'll probably see even worse figures for the following month,'' said Wong Leung-sing, an associate director of research at Centaline. ``Then things should improve slightly as many people may try to buy at low prices.''

Hong Kong's bank lending rose 13 percent in September, the slowest pace in 13 months, and almost half the 24 percent increase in August.

-- With reporting by Michael J. Munoz in Hong Kong. Editors: Douglas Wong, Tom Kohn

To contact the reporter on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net

Last Updated: November 4, 2008 04:37 EST