A guessing game is under way over whether the recent stock market slump will be followed by a crash in the residential market and the answer may lie in what history tells us. Between 1980 and 2006, the Hang Seng Index witnessed eight big downturns with corrections of more than 30 per cent. While there were corresponding downturns in the residential market in all cases, only three involved a decline of more than 30 per cent and one involved a drop of 16 per cent, according to a study from property consultant Knight Frank. The biggest slump in both markets occurred over a 12-month period from August 1997 to August 1998 as the Hong Kong economy was buffeted by the fall-out of the Asian financial crisis. The Hang Seng Index fell 61 per cent to 6,544 points in August 1998 after reaching 16,820 points in August 1997, a record high at the time. During that period, residential prices fell 45 per cent. Hit by political uncertainty, the Hang Seng Index then dropped 63 per cent to 676 points in December 1982, from a previous peak in July 1981. Residential prices fell 32 per cent during the period. In April 2003, the Hong Kong stock index dropped 55 per cent to 8,331 compared with its previous peak of 18,397 in March 2,000. This was triggered by a slow economy and the Sars outbreak. Residential prices fell 45 per cent in the same period. However, not every correction was followed by a noticeable decline in property prices. In mid-1989, the benchmark Hang Seng Index dropped 37 per cent over a four-week period in May and June due to the Tiananmen Square crackdown. But residential prices dropped only 4 per cent. When the Hang Seng Index fell 53 per cent following a tidal wave of sell-offs in the world's major stock markets between October 1987 and December 1987 there was no fallout for property prices, which actually rose 1 per cent over the same period. Unlike the stock market, the property market has been less affected by non-economic factors, said Knight Frank director and head of research Xavier Wong. All the big housing market downturns in Hong Kong had been triggered by a combination of rising interest rates, abundant supply and deteriorating housing affordability, Mr Wong said. The flip side of the coin, however, was that not every bull run on the stock market was followed by an equally strong rise in residential prices, he said.