The premium of primary or new home prices to secondary prices fell to just 4 per cent in the third quarter from 17 per cent last year, according to Barclays.

"We found that the key ingredient driving volume was that the primary average selling prices matched or were slightly less than secondary prices," said Barclays analyst Paul Louie.

The firm expects a drop in prices of at least 30 per cent by the end of 2015.

Louie pointed to Sun Hung Kai Properties undercutting secondary prices early last month when it released 181 flats at The Cullinan at an average price of HK$29,097 per square foot of saleable area. Once rebates and discounts were factored in, the net effective price was HK$25,024 per sq ft, 21 per cent below transaction prices in the secondary market.

The Cullinan attracted strong demand for those flats and subsequent batches of units despite later price rises. Barclays said overall pricing for The Cullinan appeared to be 9 per cent below the secondary market level.

At The Austin, Wheelock and New World Development also undercut secondary market prices to launch the first batch of flats on October 26. The headline price was HK$22,875 per sq ft, but analysts said effective prices averaged below HK$19,000 per sq ft after discounts and rebates.

The developers had sold 372 flats at The Austin by yesterday, when the headline price for the latest batch of 107 was raised to an average HK$25,369 per sq ft.

Some analysts, such as Alfred Lau of Bocom International, take a glass half-full approach, saying the good response indicates prices will not fall sharply.

"Sales have improved even as developers gradually increased prices. Why do developers need to slash prices further?"

Lau said developers' profit margins had fallen to about 30 per cent from 35 per cent at the start of the year, before cooling measures in February.

Barclays said some major developers' profit margin for their Hong Kong projects was below 20 per cent based on current prices.