THERE will be no property crash in Hongkong, says brokerage Wardley James Capel (WJC).
The brokerage said property values had already declined 18 per cent and the mass residential market was close to the bottom of a cyclical trough that was triggered in the second half of last year.
A property collapse on the scale of the decline in values of the early 1980s would only be triggered by a political shock on the scale of the Tiananmen Square massacre of June 1989.
Analyst Herbert Chung said the WJC model took into account a number of negative factors, including the retention of the 70 per cent mortgage limit, a two per cent rise in United States interest rates and the possibility of speculators dumping flats.
Mr Chung said purchase volumes had fallen from last year's abnormally high levels, but further declines did not threaten a property collapse.
Instead the dampening of demand by end-users and the imposition of the 70 per cent limit on lending since November 1991 meant there was substantial pent-up demand for flats.
Over the period, affordability has improved as wages have increased and property values dipped.