Property transactions have dropped despite the better-than-expected sale of two residential sites at a government auction last Tuesday. Only 40 flats in the primary market were sold at the weekend - a decline of 7 per cent from the previous week - as sentiment was affected by the latest government measures to cool the market, analysts said. The drop was a sharper 61 per cent compared with the 102 units sold in the weekend before the new measures were announced. The government has banned the quick resale of flats and vowed to put more land on the market and crack down on mortgage lending for top-end properties. Last weekend's transaction volume was only 32.5 per cent of the average volume of 123 units seen three months ago and 25.8 per cent of the average 155 units recorded six months earlier, Samsung Securities reported. In the secondary market, at the 10 largest residential estates tracked by Midland Realty, only 29 deals were made - the second-lowest weekend volume since February. The data compiled by Ricacorp Properties showed 319 preliminary sales and purchase agreements of second-hand homes at 50 housing estates were signed during the week to August 22 - a drop of 27 per cent from the preceding week. It was also the lowest sales volume in 14 weeks. 'Clearly, buyers are staying on the sidelines with weekend viewing volume down by 20 per cent,' said Lee Wee Liat, the regional property research head at Samsung Securities. On August 17, Cheung Kong (Holdings) paid more than the highest forecasts for two sites at a government auction. It paid HK$4.1 billion for a site in Argyle Street and HK$3.51 billion for the plot in Hung Hom. The total amount raised was at least 20 per cent more than expected. However, the strong result has not pushed up sales and prices. The cost of secondary units ended a seven-week increase as the Centa-City Leading Index fell 0.17 per cent week on week to 83.36 points. 'We attribute the decline in transaction volume to property owners becoming more reluctant to reduce their asking prices, while potential buyers continue to adopt a wait-and-see attitude amid expectations of more heavy-handed cooling measures,' Lee said. 'We expect transaction volumes to remain low in the near term owing to the divergent perspectives of buyers and sellers, and maintain our view that it is too early to expect a reversal in property-price trends.' The primary market slowed, but not as much as had been feared, Merrill Lynch reported. However, having said that, there were still some uncertainties, it said. 'While we had expected the latest round of property cooling measures announced by the government on August 13 to have more bite than the April measures, the strong outcome of two Kowloon auctions [on August 17] undid a lot of the government's handiwork,' Merrill Lynch analyst Karl Choi said in the latest research report. 'We are now more concerned that the outcome may eventually invite additional cooling measures.' Meanwhile, the government is to study various proposals to speed up land supply. It may also convert some of the planned public housing into subsidised housing. In a bid to cool the market, Financial Secretary John Tsang Chun-wah said on August 13 that the government would offer sites in Chai Wan, Hung Hom and Fanling for auction. It would also work with MTR Corp and the Urban Renewal Authority to increase land supply. On August 31, a residential government site at Ede Road will be auctioned and analysts expect a strong outcome. The government will offer two residential sites, in Fanling and Chai Wan, on September 29.