Tung Chee-hwa last night held a second round of meetings with property developers amid the 'most intense price war since 1982'. Mr Tung said he did not want to see a collapse in prices and pledged the Government would be flexible about land supply. But he was under increasing pressure to drop his target of building 85,000 homes a year. Last night, the Chief Executive held an hour-long meeting with heads of Sun Hung Kai Properties, including vice-chairman Thomas Kwok Ping-kwong. Mr Kwok has cast doubts on the Government's annual flat-construction target - which includes 35,000 from the private sector - in the face of the financial turmoil. The price war took off this week when Cheung Kong put on sale a project above the Tsing Yi airport railway station at a lower-than-expected $4,147 per square foot. Yesterday, Wheelock and its associates joined in with price cuts at its Diamond Hill site, Galaxia. Centaline agency boss Shih Wing-ching described the war as the most intense since 1982 and said it was likely to depress the market further. Flat prices are estimated to have dropped 30 to 40 per cent since their 1997 peak. Last night's meeting was the second consecutive day Mr Tung had held meetings with developers. A spokesman for Mr Tung played down the significance of the meetings. Mr Tung is understood to be adamant the price slump has nothing to do with his flats target, blaming external factors such as high interest rates. Speaking after a tour of Wong Tai Sin yesterday, he said the Government was concerned about the cuts in prices of new flats. 'The Government absolutely does not want to see a great fall in property prices. The stability of the property sector is very important to Hong Kong's overall stability and to the stability of our banking sector,' he said. A Planning, Environment and Lands Bureau spokesman said the Government was watching the price war. He said officials were aware of recent reports that developers were still enjoying a profit margin of 37 per cent, despite the price cuts. Rejecting calls for the Government to halt its land sale plan, the spokesman said there would be a shortfall of supply in three years if it did so. But the programme would be slowed and the offer prices of land carefully handled, he said. The spokesman said hasty changes to long-term housing strategy would give the false impression targets could be changed, because 'some people make some noise'. An official said the public had higher expectations from the Government for housing in times of difficulty. 'We can't slow down housing plans. The queue is still very long.'