Some fear property will trace stock dive, others disagree With the Hang Seng Index down more than 50 per cent from its record high of 31,958 points almost exactly a year ago, there are concerns the property market retreat will continue until prices are also down by a similar margin. Some analysts who expressed such concerns say that the property cycle generally lags events on the stock market by six to nine months. However, contrarians say that with supply taps turned low and developers adopting more cautious sales strategies, the big drop in prices that happened a decade ago will not be repeated. As of September 30, total new supply in the pipeline for the next five years - comprising completed but unsold units and those under construction that are yet to be launched for presale - was at a record low of 62,000 units, official data shows. MTR Corp's decision to shelve the tender for phase four of Lohas Park in Tseung Kwan O after the policy address by Chief Executive Donald Tsang Yam-kuen on Wednesday last week will further reduce projected supply. The tender had previously been scheduled towards the end of this year and the development expected to offer 1,300 units by 2011. At today's low supply level, developers would normally adopt a strategy of delaying launches until the last minute to maximise sale proceeds. But with demand expected to slow even faster than supply levels, taking prices further down, developers may want to secure profits by selling the units now, albeit in measured and phased releases, analysts said. Cheung Kong (Holdings) launched Seasons Monarch in Kam Tin last month after a prolonged marketing campaign to stimulate demand that included lowering the initial asking price by 17 per cent. Rival Sino Land released the Dynasty in Tsuen Wan without a lengthy marketing campaign immediately after it received presale consent. The developer priced the units at a modest 10 per cent premium to prices in neighbouring secondary markets, compared with the standard 30 per cent premium. Sun Hung Kai Properties plans to start selling at the end of this month the first phase of its Peak One in Sha Tin, which consists of about 400 flats and detached houses ranging in size from 1,000 to 2,600 square feet. The company has yet to unveil its asking prices for the units. Hongkong Land Holdings said it might delay the sale of its new residential project, the Sail at Victoria in Kennedy Town, if banks maintained their policy of conservatively valuing properties for loan purposes, which it said was making it difficult for homebuyers to take out mortgages. Nan Fung Development, meanwhile, said it would closely monitor market sentiment before launching the Tai Kok Tsui project that it is developing jointly with the Urban Renewal Authority. With limited supply in the pipeline and cautious sales strategies in place, analysts believe the property market collapse that followed the 1997-98 Asian financial crisis will not be repeated. 'The market slumped then because developers launched all their stock at once and at a huge discount to market prices,' said Wong Leung-sing, an associate director in the research department of Centaline Property Agency. 'There is no way such a cut-throat price war will be repeated in this era because of the limited supply.' According to the Centa-city Index, the average housing price fell 60 per cent in the 12 months after the outbreak of the Asian financial crisis in mid-1997. 'But the present supply of primary stock is not excessive, is reasonably spread geographically, and only about one-third of the 1990s level. So even if we were to see an accelerated release, it was unlikely to accelerate a downward movement in prices,' said Professional Property Services Group chairman Nicholas Brooke. 'At the moment, demand has far more to do with confidence than price and that is the real hurdle that the developers will have to overcome if they are to achieve significant sales of inventory.' However, while a sharp decline like that of 1997 is unlikely, analysts generally believe a correction is unavoidable.