Residential property transactions have plunged after a top aide to Chief Executive-designate Tung Chee-hwa pledged to recommend tough action to stamp out property speculation. Estate agents said buying had been shaken by rumours of pending administrative measures by Leung Chun-ying, who heads Mr Tung's taskforce on housing policy. Midland Realty said it had 1,700 sale and leasing transactions in the first two weeks of this month, a 16 per cent decline from the last two weeks in May. Deals arranged by the agent also fell more than 50 per cent in the week to June 15. Chairman Freddie Wong Kin-yip said the decline began in the second week of this month after Mr Leung announced the taskforce's intentions. Sales director Victor Cheung Kam-shing said it had received five cancellations in the luxury sector in Yuen Long and Tai Po. The buyers had defaulted on transactions because they had bought when the market was at its peak and were worried it would continue dropping after the proposals were announced, he said. Palm Beach in Yuen Long, for example, had been selling for $9,000 per square foot, but the price had now dropped to $8,000 per sq ft, he said. Last week, Mr Leung said he would brief Mr Tung on his recommendations on the territory's long-term housing policy and methods to stop property speculation. Mr Leung did not disclose the taskforce report's recommendations, which are expected to be announced by Mr Tung on July 1. Rumoured measures include the introduction of tax charges on speculators and tightened mortgage lending. Hong Kong Property Services (Agency) managing director Michael Choi Ngai-min said: 'The market was painfully quiet over the weekend following Mr Leung's statement.' Mr Choi said potential buyers were worried that rumoured measures would badly hit the housing sector. 'They are very cautious and have decided not to make any moves until the uncertainty is swept away,' he said. According to Mr Choi, there was a substantial drop in the performance of the luxury housing sector, which was sensitive to political and economic changes. Total transactions of luxury flats arranged by the agent in the past two weeks fell more than 30 per cent compared with the second half of May. In the mass housing sector, transactions had fallen 15-20 per cent, he said. Mr Choi said the property market would remain under a cloud and transactions would further decline until the Special Administrative Region government went public with its housing strategy. The market's short-term performance could improve if there was a good response to upcoming residential development launches, he said. Projects include Swire Properties' Island Place in North Point and Sun Hung Kai Properties' Royal Ascot in Sha Tin. Agents said the initial response to these two projects had not been encouraging. However, Centaline Property Agencies reported increasing inquiries from end-users hunting for bargains in a slow market.