THERE has been a flurry of speculative activity during the past few days in Hong Kong's mid-range and luxury residential property markets in reaction to last week's record-breaking government land auction. Speculators seem to have been heartened by the record price paid by a consortium led by Sino Land for a plot of Kowloon land, seeing it as a sign that property prices will go even higher than forecast. The $3.94 billion paid for a 468,449-square-foot site on Lung Ping Road, near Beacon Hill, translates into an accommodation value of $5,413 per sq ft - a record in terms of average price for floor area in Kowloon. Once construction and other costs have been taken into account, analysts believe Sino Land and friends will have to charge home-buyers about $8,900 per sq ft to make a standard profit on the development. This is a lot more than average prices being paid in the area. Although that projected price tag will come in two years' time, it is a good measure of developers' sentiment and a signal of how far prices could soon go. The strength of competition from other developers battling for the lot on the auction floor will also have been noted. Christmas is usually a quiet period for home sales, but some property agents have reported a significant increase in interest in flats, not only in the Beacon Hill area but also in other districts, where speculators feel prices could climb higher. The speed with which opportunist buyers have reacted to last week's auction has been alarming. Financial Secretary Hamish Macleod and Hong Kong's banking supremos will be taking note. With the speculative element evidently not driven out of the territory's sometimes volatile property market, the phasing out of Hong Kong's unpopular mortgage lending restrictions seems as far off as ever.