As a tumultuous year in the Hong Kong property market comes to a close, many owners and investors are assessing their options for 2013. Plenty expect a decline in prices, perhaps even a crash at some stage. But that's not useful information. We all know Hong Kong property will crash at some stage. The question is, when? If you wait for a crash of 30 per cent, and property prices increase by 400 per cent in the meantime, that expectation doesn't do you a lot of good. Given the rapid and largely unchecked price increases of recent years, however, it's likely the crash is due sooner rather than later. The government's interventionist policies certainly have contributed to a cautious mood among property investors. At the same time, though, the likelihood of rampant inflation once Western economies rebound, coupled with a total lack of returns in bank deposits and unpredictable equity markets, are factors chasing investors to hard assets such as property, commodities, gold, art, fine wine and the like. So when will Hong Kong property see the correction most expect? Despite our hunches, it is likely to be later rather than sooner, according to analysts, as a result of the generous printing of money in the United States. Alfred Lau, the Hong Kong property analyst at Bocom International, said he was puzzled by comments from Stanley Wong Yuen-fai, the chairman of the subsidised-housing committee of the Housing Authority, who last week indicated that he thought property prices ought to fall 20 per cent before they reached reasonable levels. Lau still anticipates a 5 per cent increase in home prices next year, thanks to the US Federal Reserve's pledge to keep interest rates ultra-low until at least the middle of 2015. Once interest rates do start to rise, however, mortgage rates - based on Hong Kong's pegged currency and therefore US interest rates - may rise from the current effective rates of 2 per cent to between 4 per cent and 5 per cent. That would equate to a 20 per cent fall in home affordability, suggesting a similar decline in prices - but it is still at least 21/2 years away. "But today we have a reasonable mortgage rate and that won't last for ever," Lau said. There's another factor that is leading to a chill in market sentiment and that is a slowdown in transactions - which is bad news for property agents. Industry insiders say brokers are not sure whether to talk the market up or down to stimulate demand. "The only people I'm really seeing in the market at the moment are permanent residents looking for self-use homes," said Victoria Allan, the founder of property agency Habitat Property. "I've just told my clients who don't have their permanent residency: 'Bad luck'." Allan said she had not seen a rush into other sectors of the property market such as industrial, retail or commercial space, although the increase in prices in those sectors suggests that some investors and speculators are shifting focus. "If you have got your permanent residency it's a good time to buy [residential property] because there's less competition," she said. "I am not seeing people rush into retail or commercial. I think non-resident expats are being a bit cautious." Any sellers at the moment have to consider the fact that, given the government's new restrictions, they are unlikely to be able to secure as big a property, or as attractive a mortgage, if they sell their home. "They need to consider that they are also selling their mortgage," Lau said. "There's an opportunity cost they have to bear." Although the government has been trying to increase supply, only about 12,000 flats came up for sale this year. That is a long way off the stated target of 20,000. Nicole Wong, the Hong Kong property analyst at CLSA Asia-Pacific Markets, said the introduction in October of a 15 per cent additional stamp duty on home purchases by corporate and non-permanent-resident buyers had removed about 20 per cent of demand from the market. Although lack of demand was slowing sales, prices would fall only if the economy faltered, Wong said. For the time being, wages are rising and the economy is growing, if slowly. "We have got more supply but not enough to drown us," Wong said. "So we are going to have slower price growth." CLSA anticipates a 1.5 per cent price rise next year. "We expect price growth to fall behind income and wealth growth," she said.