The argument for quitting cash and buying property looks even more compelling when taking into account that at an effective 3 per cent - and likely to head lower - the monthly repayment on an average home loan is now negative in real terms (compared with an inflation rate of 3.8 per cent), and in many districts is now below the cost of renting.

'While this does not immediately trigger a mass exodus from bank deposits to the property market, it does start to erode the value of savings and is another prompt for people to invest their money,' said Mark Konyn, the chief executive of investment manager RCM.

But all things are not equal. For one thing while domestic conditions seem to favour buying property, an unknown element that complicates the investment equation is what is happening in global financial markets - chiefly in the United States, to which the Hong Kong economy is closely tied.

George Leung Siu-kay, HSBC's adviser on strategy and economics for Asia-Pacific, said: 'The external environment is looking less positive. The US is facing a recession, Hong Kong exports will suffer a slowdown this year and this will constrain domestic economic growth and growth in property prices.'

For another, Hong Kong property prices have already soared on the strength of the interest rate outlook that has now become a reality - rising 24 per cent over the course of last year with half of those gains coming in the final quarter.

Mr Lo said: 'This indicates the rate cuts have already had a big effect on property prices and whereas a continued fall in rates should support prices and make buying more affordable, I am not quite so sure we will see any further strong increase in property prices.'

In addition, current rate settings alone did not drive investment decisions, he said, and investors would also take into account how long rates would remain negative, as well as the external environment.

'With rates already at very low levels, the room for further cuts is now much smaller than it was late last year. So I expect in the coming months banks may cut by only another 25 to 50 basis points, which means we already have had the biggest cuts done.'

Rental yields in Hong Kong currently ranged from 2.3 per cent for luxury flats on the island to 4 to 6 per cent for smaller flats, and so long as there was no further big jump in prices, investing in a rental unit would remain an attractive proposition to large investors, Mr Lo said.

'But for a smaller investor this will be a different story. The investment outlay required could be around the HK$10 million to HK$20 million mark, which will be a large sum and account for a very high share of an investment portfolio'' he said.

'After taking into account risk and return and liquidity, a retail investor might not wish to lock up this amount of money in property.'

Citi analysts expect the United States Federal Reserve will cut rates by a further 75 basis points during the year, but given the fact that Hong Kong rates are already so low, this would translate at most to a further cut of 25 to 50 basis points in Hong Kong rates, according to Mr Lo.

And property is not the only asset that may appeal to investors in the present rate environment. Investors with a higher risk appetite can also consider borrowing at low rates of interest to invest in equities - although a strong stomach may be required for the rough ride that could result.

Under 'normal' circumstances, the current interest-rate settings would support asset prices, Mr Leung said, but after the strong increase in property prices in the final quarter of last year, some homebuyers could be concerned about the danger of an asset price 'bubble' developing in the market.

'The net outcome, therefore, is a slight positive for property,' he said.

'We do not forecast prices because we are in the mortgage lending business and might be seen to be promoting the market, so I would say only that we will see some increase in the property price but not as much as last year.'

Mr Konyn took a somewhat more positive view, noting that supply in the property market remained 'pretty tight' and negative real rates were expected to be around for some time.

'The property market is a clear choice - not least as the perennial favourite of Hong Kong investors - but also due to easier credit terms and rising rents,' he said. 'The rising rents will narrow the advantage of renting over buying and encourage more households to return to ownership or indeed own for the first time.'

The weaker Hong Kong dollar had also lowered the cost of entry for overseas investors, particularly those from the mainland, Mr Konyn said. 'This is another leg of support for the market and a trend that will continue due to the gradual appreciation of the yuan.'