Shares of mainland developers fell yesterday but recovered later despite a denial by the central government that it would ease its property policy. On Tuesday evening, the National Development and Reform Commission denied media reports that quoted an unnamed NDRC official as saying loosening the property policy could be an option to rescue the beleaguered market. Mainland media also reported that the People's Bank of China had issued new guidelines allowing banks to offer up to 30 per cent discounts on loans to first-time homebuyers, which drove up property shares on Tuesday. But after the market opened yesterday morning, shares of mainland developers fell. However, most recovered in the afternoon session. Agile Property, which dropped 2.12 per cent to HK$9.71, climbed back up to close 1.62 per cent higher than the previous day, at HK$10.06. China Overseas fell 0.92 per cent to HK$17.16 before rising 0.92 per cent over the previous close to end the day at HK$17.48. However, KWG Property fell 3.5 per cent to close at HK$4.96 and Shimao Property dropped 2.2 per cent to HK$11.56. Alan Chiang Sheung-lai, DTZ's head of mainland residential property, said although the government continued to deny suggestions it would ease property curbs, it would have little impact on developers. 'Right now, developers are seeking to boost sales and are offering smaller units to target users and first-time buyers, and the central government doesn't want to do anything that would hurt this end-user demand,' Chiang said. Banks are unlikely to offer more discounts, because home prices are still correcting, he said. 'Mainland banks are already facing lower profit margins, as the interest rate spread has been narrowing, and it would be difficult for them to offer further discounts,' Chiang said, pointing out that first-time buyers respond more to lower prices than to lower interest rates. Agnes Deng, head of Hong Kong and China equities at Baring Asset Management, said demand for smaller flats is stronger than for bigger ones, reflecting the still-strong demand from end-users. Deng said property transaction volumes have picked up since the end of last year.