Renewed tightening measures by the central government to curb the real estate sector hit both mainland and Hong Kong markets yesterday as investors rushed to clear their positions on fears that the new policies could choke off sales. "We expect the measures will immediately affect buyers' sentiment and hence sales volumes. The new measures will 'freeze' the market and delay sales schedules planned for the near term," UBS analyst Eva Lee wrote in a research note yesterday. Yet some mainland developers remained confident. "Property prices will likely be a little bit volatile, but I don't think they will drop substantially," Hui Wing-mau, the chairman of Shimao, said on the sidelines of a meeting of Hong Kong delegates to the Chinese People's Political Consultative Conference in Beijing yesterday. Among the measures announced on Friday were a 20 per cent capital gains tax, extending home purchase restrictions to the entire cities and raising down-payment requirements and mortgage rates for buying second homes. The Hang Seng Properties Index lost 3.42 per cent yesterday, compared with a 1.5 per cent retreat for the benchmark Hang Seng Index. Wendy Luo, an analyst at Barclays Capital in Hong Kong, said she believed the measures would hit the "upgrade demand in top-tier cities and lead to depressed volumes and sticky prices". In contrast, low-tier cities would be barely affected, she added. Large-capitalisation property stocks led the decline yesterday. China Overseas Land & Investment, the biggest Hong Kong-listed mainland developer, lost 7.14 per cent to HK$21.45, while China Vanke fell by the single-day limit of 10 per cent in the morning to finish at 10.84 yuan (HK$13.36) in Shenzhen. Some smaller names also slumped, with Fantasia falling 9.24 per cent to HK$1.08 and Longfor Properties dropping 5.5 per cent to HK$13.40. The gloomy sentiment also hit Hong Kong developers with big exposure to the mainland. Sino Land lost 2.56 per cent to HK$13.70.