A RECORD 38,000 new flats will be completed in Hongkong in 1994, further depressing the property market, according to a study by Brooke Hillier Parker. It forecasts that 29,000 units will be completed this year. In 1992, 24,000 units were completed. It is believed that the increase of supply will be an overhang on the property market, while Brooke Hillier Parker predicts that the price of a unit on average would drop by five to 10 per cent this year. With inflation taken into account that's a drop in real value of 15 to 20 per cent. ''However, the political impasse between Beijing and London will also have a significant impact on the property market. The Sino-British war of words has a negative psychological effect on home buyers,'' said Brooke Hillier research manager, Ms Anna Sze On-na. On average, 30,000 units are completed each year. The record for the number of units built in a year was in 1989 when 34,700 were completed. ''The number of flats to be completed this year is not particularly high, it's just that new developments for last year was especially low. But next year, it will hit a record high,'' she added. The new developments for the next two years will focus on small to medium-sized flats located in the New Territories. The property market enjoyed a boom and prices have increased more than 70 per cent between 1991 and the first half of last year. But prices have been in a lull since last July. Mr Peter Churchouse, principal with Morgan Stanley, said that it was a technical correction. The price became unaffordable for average buyers. ''It means that the Government measure [the 70 per cent mortgage ceiling which was instituted early last year] has started to work. I was surprised that the measure took more than one and half years to produce result,'' he added. Recently, some developers and banks urged the Government to relax the mortgage limit. Three weeks ago, Henderson Land took the initiative to provide 90 per cent mortgage for its new development at Sha Tin, Park View Garden. All units were sold immediately. However, the response to Sun Hung Kai's new Yuen Long Centre launched on January 7 was disappointing. Under pressure from the Government, the developer did not provide 90 per cent mortgage and it only achieved 60 per cent sales. There is mixed feeling in the market as to whether residential property has recovered. With more new developments coming on to the market, Ms Sze advised buyers to buy their property in the second half of the year.