Property speculators are beginning to take losses, with the volume of transactions down to perhaps its lowest level in a year. Whether these are signs that Hong Kong's mini-boom in property has come to an end or whether the bulls are simply taking a breather will become apparent in the coming months. The market is doing what markets do best - correcting excesses and finding equilibrium between supply and demand - so any temptations to tinker on a policy-making level should be resisted. Price rises have been steep in the luxury sector and rather more modest in the middle and lower sectors of the market. Transaction volume for top-end flats, not surprisingly, quadrupled in the first quarter of the year. If developers needed any signs that they are getting too far ahead of consumers' ability or willingness to finance purchases - especially at the lower end of the market - this slowdown should be a clear sign. We should now expect an easing of agency hype and some more restraint when it comes to pricing new projects. Interest-rate concerns are valid, and the uncertainty will not be removed until the US Federal Reserve finally makes its move. But the far likelier explanation is that a measure of rationality has returned to the housing market. Volume and deal-making should pick up again when pricing is in line with the local economy's fundamentals: modest growth and a still-high level of unemployment. Economic indicators are showing signs of improvement, but whether they justified the kinds of increases seen in property stocks and flat prices over the past year are open to question. If buyers now begin thinking twice about jumping in, this is not necessarily an unhealthy development. The supply of units is adequate for the near term and developers are showing keen interest in replenishing their land banks for the future. As long as affordability can be maintained, and speculators do not take over the market, there is hope that the sector will find its own footing. The government should continue on its current path: releasing development plots according to its pre-arranged bidding system. It ought to be left to the property companies themselves to judge demand and decide whether to bid. Disposal of any remaining unsold Home Ownership Scheme flats should be conducted in a transparent and predictable manner; the same applies to any plans to resume construction along the Kowloon-Canton Railway Corporation's lines, as recently mooted. Homebuyers have obviously put on the brakes and ended what was shaping up to be a price-driven frenzy. That they have need not send the sector into a tailspin or bring in government intervention. The market, if left to its own devices and allowed to respond to macroeconomic conditions without interference, will take care of itself.