YESTERDAY'S unsettling outcome of the government land auction could well damage the Hong Kong property sales market over the next few days but most analysts believe the effects will be short-lived. If home-buyers conclude that there were larger forces to play than just damaged developers' sentiments, then investors are expected to take yesterday's poor auction result with a pinch of salt and soon return to the market place. It is not yet clear whether the boycott by many of Hong Kong's normal brigade of big-time auction room spenders was because of the sites, the depressed market, or a political hands-off message to the government for interfering in their business. Onlookers were shocked to see just one bidder, CITIC Pacific, make an offer for the two larger Crown sites up for sale in Tai Po and Kwai Chung. Normally such sites - especially the larger 36,059-square-foot residential one at Tai Po - would attract many rival contenders. Things got worse when the third lot, a small industrial-godown lot in Yuen Long, drew no bids at all and had to be withdrawn - the first time this is believed to have happened since 1981. The $950 million paid for the Tai Po site was the government's minimum opening price and translated into a worryingly low accommodation value of just $3,447 per sq ft. This is some 28 per cent lower than the record $4,480 per sq ft accommodation value paid by Sino Land for a similar residential site next door in Tai Po in March when the homes market was at its speculative peak and before Governor Chris Patten announced his crackdown. Since March, and the Government's measures to stabilise prices in June, average home values have fallen 15 to 20 per cent, depending on who you ask, as speculators flee the market. But in the past few weeks most people in the market have been saying that the slide was bottoming out and that a rise was on the cards. Admittedly, the site sold to CITIC has a higher plot ratio than Sino's, meaning it lends itself to not quite such a luxurious development, but even so, the experts were stunned by how little it fetched. Alex Wong, general manager of Hong Kong's largest high street real estate chain, L & D Properties, expected yesterday's poor result to drive prices down another five to 10 per cent in the short term, before recovering later in the year. Shih Wing-ching, managing director of Centaline Agencies, expected the recent recovery in transaction volumes to tail off again in the aftermath of yesterday's auction result. However, he was unwilling to read too much into the result. ''With only one bid apiece, you cannot tell how much other developers would have been prepared to pay for the sites and therefore it is difficult to tell whether this affects the market,'' said Mr Shih. ''The result reflects nothing about the state of the property market,'' said Morgan Stanley Asia managing director Peter Churchouse. ''I have never, ever in all my years in Hong Kong ever seen anything like it. The market isn't that bearish out there.'' Michael Choi, president of the Society of Hong Kong Real Estate Agents and managing director of Land Power Agencies, was also surprised. ''Interest rates may be rising and the Government has taken steps to stabilise home prices, but I was surprised the bidding was so bad. ''But given all this, I was still disappointed,'' he said. In fact, Michael Leary, HG Asia's property analyst, said there were signs the market was starting to improve. ''At the moment, supply is low and that isn't going to change in the short term. And coupled with what looks like an increasing eagerness by banks to ease up on lending restrictions, the residential market looks ready to improve,'' said Mr Leary. John Corrigall, the Government auctioneer, conceded that the site was slightly inferior to the one sold in March, but was certainly not worth 28 per cent less. Mr Leary said: ''CITIC did well. It picked up a good piece of property at a reasonable price,'' he said. ''The drop in the Hang Seng Index is simply a knee-jerk reaction. It won't be long term.'' Nicholas Brooke, partner at Brooke Hillier Parker, said: ''I am not surprised by the auction. It is part of the drift of things at the moment.''