HONG KONG'S swelling unemployment and doubts over job security amidst general economic gloom will curb home buying and hit property companies' bottom lines say analysts, who see results taking a hit following a tumultuous week. Property companies have slashed prices in a bid to attract customers, a move certain to hit profits. 'Prior to the announcement, Henderson [Land Development] saw 4 per cent off 1998 and 7 per cent off 1999(earnings) and that will be the case across the board, although Cheung Kong may be a bit lower,' Paribas Securities property analyst Andrew Taylor said. Henderson raised $2.24 billion to invest in the local property market through property subsidiaries holding stakes in the Sheung Shui Centre and Metro Plaza. Sun Hung Kai Properties cut its prices for a development after Cheung Kong asked below-expectations prices for flats at a nearby project. Wheelock and Henderson followed suit. DBS Securities senior manager Winnie Chiu saw no rise in property developers' earnings across 1998 with a marginal dip for some. 'The outlook is not as good as it was before,' she said. 'We're looking for a 5 per cent dip on average in earnings for 1998 across the board for big companies.' Ms Chiu hoped for a modest market recovery by 2000 in terms of earnings on the heels of a rebound in the physical market in 1999. But several analysts stopped short of dropping numbers as a result of a price war. 'The price cutting seen very recently in my opinion is definite posturing among large developers,' Salomon Brothers property analyst Michael Green said. 'My understanding is that everything has been sorted out at this point, there have been some discussions among developers. 'As we forecast, and as seems to be the case at this point, this price war was more a skirmish and it's over.' Mr Taylor doubted a price war was in progress, noting that in a price war Sun Hung Kai and Henderson Land would have waited until they could gauge demand for Cheung Kong units at the price level set, and undercut. On Thursday Cheung Kong's Li Ka-shing said property prices were unlikely to fall much further as they were near development costs. Amsteel research head Edward Chan said the key to the market remained whether people could afford to buy property based on incomes, interest rates and changes in property prices. 'We believe people within the top 25 per cent and top 50 per cent (household income brackets) are able to buy a reasonable home at very acceptable prices,' he said. On average, those in the top 25 per cent earned about $57,000 a month. Those in the top 50 per cent earned an average $47,000. Mr Chan agreed that developers were unlikely to embark on a price war. 'Their financial position is quite healthy, none are cash strapped and unless we see a further deterioration of unemployment rates which will affect income expectations, property prices are near the bottom level,' he said. Mr Green estimates that on an adjusted basis, on the weighted average of transactions, the market has declined 23 per cent since August last year. Ms Chiu noted that the middle income group was badly hit by layoffs which had reined in the flat-buying. 'Even if they have the capability to buy flats, they don't dare to do it, because they think: 'how secure is my job',' she said.