Hong Kong banks have begun applying the brakes on home loans, and the consequences are already visible as the recent run of world record-breaking purchases of luxury homes in the city comes to an end. 'Transactions in luxury units fell 30 per cent last week compared with a week earlier,' said Terence Tong, a director at Centaline Property Agency. Until that turnaround, wealthy investors had been pouring capital into the luxury sector of the market, running up a total of 1,351 transactions valued each at HK$10 million and above last month, almost triple the volume of sales in August, according to a report by property consultancy CB Richard Ellis. Tong said the tighter credit conditions were not sufficient to have dramatically affected the purchasing power of buyers of luxury property, but the signal sent by the move had dented buyer confidence. The Hong Kong Monetary Authority told banks last Friday to reduce the amount they lend to buyers of luxury homes from 70 per cent to 60 per cent of a property's value in the case of homes priced at HK$20 million or above. For properties valued at below HK$20 million, the 70 per cent loan-value ratio will be maintained, but the maximum loan amount will be capped at HK$12 million. The banking industry regulator also called on lenders to be prudent when valuing properties as well as when calculating the affordability of homes for borrowers. The move follows on a rise of about 40 per cent in prices in the luxury sector, driven by low interest rates, limited supply, and money flowing from the mainland. 'But buyers are now hesitating, as there are many reports about property prices surging too high,' said Tong, citing the record-breaking sale two weeks ago of a duplex at Henderson Land Development's 39 Conduit Road in West Mid-Levels. The duplex sold for HK$439 million or HK$88,000 per square foot of saleable area, prompting sellers of upmarket properties to increase their asking prices to a point where buyers were being driven out of the market. Midland Realty sales director William Lau said sales of luxury flats in Island South and Happy Valley dropped 50 per cent last week as home seekers adopted a wait-and-see attitude towards the market after the record-breaking transaction. Aggressive asking prices that followed may also have been partly prompted by data showing that the number of flats available for sale fell to 47,000 at the end of last month - the lowest level since records began in the third quarter of 2004 - from 49,000 at the end of June.