There is unlikely to be much of an upturn in prices and transactions in the luxury residential property sector during the Year of the Rabbit as long as local economic indicators remain gloomy, FPD Realty managing director Frank Marriott says. He said record high unemployment, the failure of the various international trust and investment corporations (Itics) and the overall negative economic sentiment in Hong Kong were dragging on the local residential property market. He said these factors as well as some international indicators would affect buying sentiment and keep prices and transactions subdued in the short to medium-term. After a slight recovery in the market in October and November last year - when prices jumped between 10 and 15 per cent - the luxury market has once again hit the doldrums, according to FPD Realty. 'January was the worst month in terms of volume of sales,' Mr Marriott said. 'We have had some bad economic news and we have had the collapse of the Itics.' Mr Marriott said that what was really lacking was any confidence that there would be a turnaround in the economy. 'The sentiment and the confidence is really lacking,' Mr Marriott said. He said it would be a case of more of the same this month with few sales and prices remaining stagnant due to the Lunar New Year. It was unlikely there would be an upsurge in the market next month either, he said. Luxury prices in March were expected to drop another 5 per cent based on very limited transactions, Mr Marriott said. 'The market could come off by another 5 per cent as only the desperate sellers will try to get rid of their properties,' he said. Mr Marriott said this lull in the market could last until April when transaction levels were expected to pick up slightly. He said there might be a correction in prices thanks to the announcement of a resumption of land sales in April. He said the luxury market 'might see a golden period' wherein transactions would increase. Any improvement in sentiment would be more likely thanks to another cut in interest rates, he said. As a result, buyers might be tempted to return to the market. 'We might see a bit of a golden period, a window whereby the market might be attractive enough and sentiment strong enough that there would be an increase in sentiment,' he said. However, prices would remain static. The only difference would be an increase in sales transactions. In the long term, he did not expect much activity in the market until late in the third quarter or the fourth quarter. 'I expect this year to be better than 1998 but one has to be cautious. 'There are going to be some internal and external areas which are going to affect people's decisions to buy.'