CLSA has joined the chorus of investment banks predicting that Hong Kong will run into a bear property market as it forecast a 17 per cent price drop in the next 27 months. In a research report, the investment bank said buying power in the property market had been exhausted as developers rushed to dispose of their assets. "We expect [a] 17 per cent price correction in the next 27 months, with 2 per cent in the fourth quarter, 10 per cent [next year] and 5 per cent in 2017," Nicole Wong, CLSA's regional head of property research, said in the report. CLSA said demand from upgraders was declining. That could be seen from the falling number of double stamp duty payments, down for four consecutive months, from 4,544 to 2,952 - a 12-month low. We see more downside price risk CLSA analyst Nicole Wong The ratio of primary market sale value to gross domestic product climbed to 8.6 per cent in the second quarter, which was a 15-year high, the report said. On the other hand, the sell-through rate of new launches has plummeted, with 65 per cent recorded this month, against 90 per cent last month. Midland Realty said in a report sales of homes valued at more than HK$10 million fell 19.5 per cent quarter on quarter to 107 deals in the past three months. Estate agents continued to report price cuts in transactions, reflecting the market's cautious sentiment. In an example, a flat owner at Valiant Park on Conduit Road in Mid-Levels West sold an 802 square foot unit for HK$13 million, HK$2 million below his asking price. The transacted price was also 8 per cent below the market rate, according to Ivan Cheung, a senior manager at Ricacorp Properties. With an increase in interest rates looming in the United States and an expected economic slowdown, an increasing number of investment banks are expecting the city's home prices to come under downward pressure. Some are predicting prices will fall as much as 30 per cent from the current level by 2017. CLSA expects a smaller decline. Given the Hong Kong dollar's peg to the US dollar, any movement in United States interest rates will affect the city's property market. The US Federal Reserve is due to meet next week to possibly look at the timing of raising rates. Property buyers who acquire more than one flat are required to pay double stamp duties, which were introduced by the government in 2012. Under the rules, buyers will be refunded the duty for the second flat if the first is sold within a certain period. Deals in the secondary market, as represented by Midland's 35 key housing estates, hit a low of 41 per week, 40 per cent fewer than in the first quarter of 2003 during the outbreak of severe acute respiratory syndrome. CLSA said residential prices, as represented by the Centaline City Leading Index, which has been rising this year, was unsustainable and had to fall. In the second week of this month, the index declined 1.6 per cent from this year's peak. "We see more downside price risk," it said. The investment bank also expects to see a fall in rents amid an increase in the number of flats, mainly smaller units, being completed.