THE lethargic housing market is hitting developers' earnings, with two property companies posting a moderate drop in net earnings in the first half of this year. Hongkong Realty and Trust announced unaudited profits attributable to shareholders of $459.7 million for the six months ending September. Its listed subsidiary, Realty Development Corp, posted a drop of 50 per cent in net profit to $178.5 million from $358.1 million previously. The Realty & Trust result represented a fall of nearly 15 per cent compared with $540.5 million in the corresponding period last year. The company's operating profit fell 13.17 per cent to $338.1 million while earnings for its A shares and B shares both fell 14.9 per cent to 111.1 cents and 22.2 cents respectively. The directors have declared an interim dividend of 16.75 cents per A share and 3.35 cents per B share, payable on January 25 to shareholders on record on that date. The group's turnover fell 26 per cent to $568.5 million from $768.9 million. The company had an exceptional gain of $153.4 million from the disposal of long-term investments. Yesterday, chairman John Lees attributed the drop in profits to the downward trend in the territory's housing market and expressed satisfaction with the achievement of the past six months in the face of poor market conditions. 'Subsequent to the exceptionally strong growth witnessed during the turn of the year, the property market has been undergoing a structural readjustment process, accelerated by the introduction of the government's anti-speculation package in June 1994,' said Mr Lees. 'It is therefore a matter of reality that near-term profits are affected for the company and its subsidiary Realty Development Corporation Ltd because of developers' inability to book profits from sales as a result of pre-sale consent not being forthcoming. 'Property units not sold as a result of this gap year will be deferred to subsequent years. As our land bank has been accumulated at a relatively low cost compared to the price prevailing in the secondary market, we have a good cushion of profit when looking to the future,' said Mr Lees. However, property analysts were more cautious about the outlook for the company because of gloomy prospects in the housing market. Roger Luk, property analyst at Sassoon Securities, said property units to be sold in the coming months would be limited because of poor market sentiment. Prospects for property stocks, including Realty & Trust's 70 per cent-owned subsidiary Realty Development Corp, would not be encouraging, he said. The 50 per cent fall in earnings of the listed subsidiary was attributed to the lack of an exceptional gain this year. The company posted a $149.4 million gain as an exceptional item in 1993. Operating profit fell 19.79 per cent to $187.6 million against $233.9 million over the corresponding period last year. Earnings per A share were down to 77.5 cents from 159.9 cents while earnings per B share fell to 15.5 cents from 32 cents. The interim dividend remained unchanged at 30 cents per A share and six cents per B share. The dividends will be payable on January 25 to shareholders on record on that date. Turnover fell slightly to $373 million from $376.8 million previously.