Property developers and real estate agents are fostering unreasonable optimism among home buyers, according to several leading analysts. There is growing concern the actions of property firms are encouraging people to risk their life savings during these turbulent economic times. An analyst at a European bank described the actions of talking up the market as 'morally reprehensible'. 'It is quite unethical for the property companies to be telling people to spend their life savings on an investment that may sink, as much of Asia still threatens to be further engulfed by the economic crisis,' he said. Since the property slide began last summer, developers and estate agents have come forth on numerous occasions declaring that housing prices have bottomed out, only for prices to be struck down again by the deepening economic crisis in Asia. Residential property prices have slid 40 to 50 per cent since peaking last May. Prices in some areas, such as Kornhill Estates in Quarry Bay, have fallen back to September, 1996 levels. Developers, such as Sino Land and Sun Hung Kai Properties, and property agents have begun using the Government Budget as their latest tool to stir up weak buyer demand. The Government last week introduced a mortgage relief salaries tax allowance of a maximum of $1,400 per month, described as token by some tax experts last week. SBC Warburg property analyst Franklin Lam said property companies' had an obvious inherent self-interest in talking up the property market. 'But I don't think anyone really listens to them,' he said. Credit Suisse First Boston property analyst Martin Tacon said: 'Truth is, while everyone is watching the market carefully, no one knows where it's heading.' Mr Tacon said there were too many fast-changing external variables affecting the local market. 'The interest rate environment has changed, and with the currency crisis in Asia being far from over, local interest rates could rise sharply again,' he said. If interest rates rose sharply again as they did in October, property prices would fall again. But another round of price declines could have more devastating consequences, as the likelihood of mass mortgage default is now higher. Merrill Lynch property analyst Carol Lai said a further 10 per cent fall in property prices meant up to 43 per cent of homeowners who bought properties in the past year would fall into negative equity. Centaline Properties Kornhill branch manager Sam Ng said transactions at the Quarry Bay estate had buoyed from 30 sales in January to 60 sales as of yesterday. But there is an increasing difference between the asking prices of $7,200 per square foot and recent sales of about $6,100 per sq ft. 'Some owners are taking advantage of the news and raising their prices, while others are being more reasonable and pricing their flats to sell quickly while there is some interest again,' he said.