Analysts warn that Hong Kong could see a repeat of the 1997 property bubble as government figures show that the supply of new flats has dropped to a five-year low, a condition that could boost prices to unsustainable heights. 'Limited new supply and low interest rates encourage investors to enter the property market for investment,' said Eric Wong Chun-yu, a co-head of Asia property research at UBS. He said the current property bubble had not yet reached the level of 1997. 'But the bursting of the bubble is unavoidable. And [it] is expected to burst in about six months.' The Centaline City Leading Index shows that prices of 86 key housing estates have risen 27.56 per cent since the beginning of the year and returned to the peak level of last year. The latest figures from the Transport and Housing Bureau show that the number of units available for sale fell to 47,000 at the end of last month from 49,000 units at the end of June. The new supply is the lowest level since records began in the third quarter of 2004. About 11,822 units were sold in the last two quarters. Owing to the strong property sales, the number of unsold units at completed projects dropped to 7,000 last month from 8,000 three months ago. There are only 40,000 units under construction but not yet sold. According to research by Centaline Property Agency, new residential supply - which includes units under construction and those on which work has yet to begin - has decreased 7.14 per cent to 52,000 units in the third quarter. This is also a five-year record low. Future residential supply is unlikely to improve in the short term, based on the research by the bureau. Construction started on only 5,100 units in the first three quarters of the year, compared with 5,900 units a year ago. Wong said the government should solve the problem by increasing what had been a very limited supply of land. However, Eric Yuen Chi-fung, the head of research at Guoco Capital, said the real demand was from investors, not end-users. 'More than half of the households in Hong Kong own their properties,' he said. 'The demand from end-users is limited. I don't think we will face a shortage of residential supply.' But the limited supply of new flats and low interest rates had provided a good opportunity or excuse for investors to speculate, he added. He expects property prices will rise further. 'Nothing the government does can control property prices,' he added. 'Property prices will be adjusted by the market when the prices rise to unsustainable levels.' However, Wong Leung-shing, an associate director of research at Centaline, said he believed that the new housing supply would rebound to 60,000 units a year if the government launched the West Rail residential projects next year. The 12 projects could provide 30,000 flats.