THE cool market response to the government land auction last week ended any hopes of a recovery in the residential property market this year. David Faulkner, a partner with property company Brooke Hillier Parker, said Hong Kong's residential property market had needed a major confidence boost. ''But the results of the auction have put the chances of that to rest,'' he said. Residential property prices dropped in April this year after the Government announced plans to combat the spiral. Unlike previous land sales, only China's CITIC Pacific was bidding at last week's auction. The big developers who normally dominate the bidding did not attend the auction, enabling CITIC to walk away with sites in Tai Po for HK$950 million and Kwai Chung for $220 million. Mr Faulkner said the auction was another turn of the screw for the territory's residential market. ''This is a negative development for sellers because it indicates that there is still room for prices to come down,'' he said. With further drops in prices expected, buyers are likely to stay away. Mr Faulkner said the flow-on effect into the residential market may not be felt immediately. According to BHP's survey, asking prices for flats in North Point, Quarry Bay and Chai Wan have all dropped in the past month. In Quarry Bay, where flat values rose by almost 35 per cent in the past year, there was a 2.8 per cent drop in asking prices. The average price of a North Point flat in City Garden, Fortress Garden and Tanner Garden is now close to $6,579 per square foot.