Hong Kong businessman Raymond Chiu says he has perfect credit and is prepared to spend about HK$16 million on a 1,000 sq ft apartment in Mid-Levels. There's just one catch. The government requires a 50 per cent down payment. That's "really putting us off", said Chiu, 45, who owns an information technology consulting company. "I run a business, so cash flow is important. It's frustrating because this is non-negotiable, though I have perfect credit history." Prices of high-end apartments, defined as those larger than 1,000 sq ft or costing at least HK$10 million, have gained less than the broader market since the second half of last year. Buyers in Chiu's price bracket have been hardest hit after the government raised minimum down payments six times over less than three years as part of curbs to make homes more affordable. The slowing price growth in high-end apartments is the first sign that efforts to temper rampant speculation that has fuelled a surging housing market are working even as it stings luxury developers and potential homebuyers. Broker Cushman & Wakefield forecasts that prices of homes valued at more than HK$10 million will fall about 3 per cent in the fourth quarter, extending a 3 per cent drop so far this year, while those selling for less will be little changed. "The luxury segment has taken the first and the most direct hit," said Buggle Lau, chief analyst at Midland Holdings property agency. "The measures were aimed at driving the speculators away and they have certainly achieved that, but many people wanting to buy for their own use are also affected." An influx of wealthy buyers from the mainland, mortgage rates close to record lows and a financial-services sector that has thrived thanks to fundraising by mainland companies helped fuel a 250 per cent increase in luxury-home prices from 2003 to the beginning of last year, outpacing the 150 per cent gain in mass-market homes, according to statistics compiled by Savills. The London-based broker defines luxury homes as those with at least 1,000 sq ft or value of at least HK$15 million. Hong Kong home prices are the world's highest in a Savills survey of 10 cities, including London, New York and Tokyo. The value of luxury properties will drop as much as 5 per cent in the second half after a 3.2 per cent decline in the first three months of the year, according to Savills. There were about 86,000 luxury homes - or units of at least 1,076 sq ft - in Hong Kong at the end of last year, according to govern ment statistics. That represented about 7.7 per cent of private homes in the city. About 24 per cent of the 10,149 new homes completed by developers last year were larger than 1,076 sq ft. The gap between the top end of the market and the cheaper bracket narrowed last year as the government's mortgage tightening started to impact the luxury segment. Prices of mass-market homes rose 20 per cent last year, almost twice as fast as those of luxury homes, Savills says. Prices of luxury homes began to decline after the government slapped a 15 per cent tax on all non-resident and corporate buyers in October last year as it sought to stem the inflow of mainland capital into the property market. "For a while, [mainland] buyers were the main driver for luxury homes," said Thomas Lam, Hong Kong-based research director at broker Knight Frank. "When you raise buying costs for them, of course it takes away a large part of the demand." Mainland buyers accounted for an estimated 8 per cent of private home sales in the city in the third quarter of this year, down from a record 25 per cent in the fourth quarter of 2011, according to Centaline Property Agency.