Hopes are growing that official efforts to cool Hong Kong's red-hot property market may finally be working.
Two months ago the government doubled the stamp duty it charges typical home-buyers to around 5.5 per cent.
At the same time the Hong Kong Monetary Authority ordered the city's banks to increase the amount of capital they hold against new residential mortgages.
To cover their higher capital costs, the banks turned around and raised mortgage rates by 0.25 of a percentage point, pushing the interest rate on a typical new loan up from 2.75 per cent to 3 per cent.
You can already see the impact in the market. The number of residential property transactions plunged in March, falling 60 per cent compared with the same month last year.
As the first chart shows, that's almost as steep as the fall in sales volumes during the 2008 financial crisis.
When the number of transactions falls, prices usually follow soon after. Over the second half of 2008, prices tumbled by 23 per cent.
Some market observers believe we may be about to see a fall of similar magnitude. In the past few weeks, with potential buyers deterred by the official cooling measures, would-be sellers have begun dropping their asking prices. As a result, the closely followed Centa-City leading index of secondary market prices has now slipped by 3 per cent from its mid-March peak.
Yet although many analysts expect further falls in the short to medium term, it doesn't necessarily follow that we will see a major double-digit decline any time soon.
After all, it took the extreme external shock of the financial crisis to cause the 2008 correction. And when the world's central banks responded to the crisis with massive liquidity injections, the buoyancy of Hong Kong's property market soon reasserted itself, with prices taking just 10 months to recover their lost ground, despite the economic downturn.
Since then, the city's home prices have proved stubbornly resilient, despite repeated official efforts to cool the market.
Through 2011 the HKMA came out with a series of increasingly tough restrictions on mortgage borrowing designed to deter people buying multiple homes as investments.
But although transaction volumes dropped steeply for a period of several months, the HKMA's measures barely dented prices. Over the fourth quarter of 2011 the Centa-City leading index did slip by 6 per cent. But prices remained in positive territory in year-on-year terms, and, afloat on a flood tide of cheap liquidity, the market quickly shrugged off the HKMA's cooling measures.
Something similar may happen this time around. Following the recent fall in transaction volumes, it is likely that demand is beginning to accumulate. With mortgages still available at a relatively cheap 3 per cent interest rate, any further declines in prices over the coming weeks might entice buyers back into the market, lifting prices once again.
However, even if prices do fall another 20 per cent from here, it won't do much to solve Hong Kong's problem of unaffordable private housing.
That's because a 20 per cent fall from here would only take home prices back to where they were last March, when everyone agreed they were already at prohibitively high levels.
The problem is the Hong Kong government's land policy, which has long drip-fed the market with a restricted supply of building land, in combination with the city's currency peg, which means our interest rates follow US rates, even if they are far too low for economic conditions here.
The government has promised to boost land supply, but there is no prospect of any changes to the peg. That means Hong Kong property will remain eye-wateringly expensive for the foreseeable future.