Home prices in Hong Kong, Shanghai and Mumbai are most vulnerable to a correction, says property consultant Savills.
In its latest research report on the world's 12 major cities, Savills says "new world" economies - referring to China and India - recently saw weak economic growth while older industrialised economies, such as the United States, Britain and Japan, are recovering more strongly than many had anticipated.
"As a result, the runaway real estate price increase in 'new world' cities has abated and in some cases, such as Mumbai and prime Hong Kong, it has even reversed," said Yolande Barnes, a director of Savills World Research.
While residential property values in Hong Kong, Shanghai and Mumbai look more vulnerable, those in London and Dubai are on the higher side but still some way off the levels in cities that have seen the fastest increases in property prices, the report says.
According to Centaline Property Agency, home prices in Hong Kong's secondary market have been weakening.
The agency's housing index, which tracks second-hand home price movements at 100 housing estates, last week fell 1 per cent from the previous week to 117.22, shedding 1.6 per cent so far this year.
Developers in Hong Kong have also started offering new flats at 10 to 20 per cent below secondary-market rates.
As the United States continues tapering its quantitative easing policy, asset price growth will inevitably slow globally, says Savills. However, with bond yields and interest rates likely to rise sooner in Asia rather than in the West, it says it is this region that is expected to see the most stress in overstretched markets in the short term.
The report also says Hong Kong is the world's most expensive city for accommodating financial sector staff, who on average are estimated to cost US$144,000 a year in terms of living and work space. London is next, at US$133,000.
The report names New York and London as leading international cities, a characterisation based on a combination of indicators such as global competitiveness and measures including connectivity and the number of international visitors.
The ranking was also determined by factors such as the cities' prominence and fame and their economy that affect the "cross-border investability" in their real estate.
Singapore and Paris ranked second while Hong Kong ranked fifth in the list.