THE common view is there are two certainties in life: death and taxes. There is a third: economic cycles. Hong Kong is due to suffer the vagaries of a cyclical down turn in property prices. That is the view of brokerage Morgan Grenfell Asia anyway. The 1994 slow-motion crash in stock prices, down about 35 per cent this year, is about to be felt in the property market. In an analysis of property company shares in Hong Kong the brokerage concludes their historically low stock values is signalling a major correction, if not a crash, in residential and office property prices and rents. Property prices have already softened, falling something like 15 per cent in the second half of the year. Morgan Grenfell believes things are due to get an awful lot worse with residential prices slumping 35 per cent and office space prices collapsing 56 per cent. High interest rates, political uncertainty with rampant unregulated speculation lay behind the financial collapse of 1982 to 1983 when the territory's currency plummeted, the biggest fraud in Hong Kong's history emerged in the Carrian Affair, and five banks were bailed out by the Government. Since that time a major economic boom has been fuelled by a more stable financial regulatory framework, low, and sometimes negative, interest rates and a return of confidence in Hong Kong and China, broken for a short while by the Tiananmen Square massacre in June 1989. Now the economic cycles have turned again. Interest rates are rising, capital is becoming harder to come by while China looks less steady economically and politically. This is wiping out the massive gains seen in stocks and property last year. Years of liquidity driven asset inflation in 1991 to 1993 have been replaced by the sucking sound of high interest rate driven asset deflation, pulling down the value of stocks this year and property next.