MASS residential property activity has increased considerably since last week's exciting land auction results although there is no sign of any obvious rebound in prices. Estate agents said home buyers, convinced the downside of residential prices would be limited, have thrown caution to the wind and started returning to the market. Michael Choi, managing director of Land Power International, said the land auction which fetched prices in excess of projections was a signal that developers had confidence in the market. ''More and more people are making the decision to purchase. During the last four or five days we are seeing 20 per cent more transactions than during the first 20 days of July,'' he said. A consortium formed by China Travel Service, Hong Kong Parkview Group and Lai Sun Development paid a higher-than-expected $890 million for a Tai Po residential site at the auction. It was estimated that completed properties on the site would sell for more than $6,000 per square foot. Taking the good price and positive sales outlook into account, estate agents reckoned the price of flats was not likely to drop any farther than the 15 to 20 per cent recorded so far during the last three months. Property business has been slack for the past three months, marred by a sharp reduction in both transactions and prices. Sensing that the market will soon bottom out, if it has not already, buyers are now out shopping for suitable properties, according to estate agents. Shih Wing-ching, managing director of Centaline Property Agency, said buyers had been cautious in the past few months, and the strongest pressure to sell rather than buy properties was felt in April and May. ''But now the buyers are most eager and they are now coming into the market,'' he said. ''The land auction sent a good signal to the market that the price of property is not going to drop much further.'' Developers are also taking advantage of improved market sentiment following the successful auction to release their residential projects for sale. Sun Hung Kai Properties and Henderson Land Development are selling the latest batch of units in Villa Athena and Sunshine City at the end of this week. Sino Land will also put its Avon Park project on offer soon and more projects are coming. Agents expected to see a strong buyers' response to these projects - not only because of the improved market conditions, but also the developers' offer of preferential payment terms and the reduction in selling prices. Henderson Land has cut the selling price for the 68 units of Sunshine City now on offer by 11 per cent to an average of $4,763 per sq ft. According to some agents, many of the people out shopping now for new flats actually sold their old flats in April and May, so that financing from banks is not a problem. First-time buyers who are also keen to buy may use the special payment terms offered by developers. Synthia Dillon, director of residential sales at L & D, said the market was coming off a terrible period with transaction levels declining by as much as 70 per cent in previous months. Market activity began to pick up and the firm reported a 35 per cent increase in transactions recently, she said. However, Joseph Ho, managing director of Wayful Property Agents, said the primary sales market was still thin, with developers offering new units at lower prices. ''If developers have confidence in the market in the future they wouldn't be acting like this,'' said Mr Ho, who expected the market to remain pretty flat until the end of the year. As for the second-hand market, he thought activity would not really take off until expectations of buyers and sellers got closer. Vendors were assuming things were going to get better following last week's successful government land auction, and were consequently unwilling to further cut their prices. Some agents said there were still worries about the real impact of the government's restrictions on the re-sale of unfinished flats before a project's completion. New residential projects on sale recently were not restricted by the ban on re-sale because they had secured the government's consent before the new measures were introduced.