In addition, supply has increased as a result of the coming vacancy tax on empty flats and launches of new developments. During the three-day Mid-Autumn Festival in September, almost 900 flats went up for sale – the most at one time in the past five years. Meanwhile, developers have been releasing into the market long-held luxury flats never lived in so they don’t get hit with the severe vacancy penalty.

Not only are used home prices falling. Developers have been dropping prices of new flats and offering other deals to try to stimulate buying.

For example, Kerry Properties in September offered easy purchasing arrangements, in which buyers had more than two years to line up financing, after it experienced trouble selling luxury units at its Mantin Heights development in Ho Man Tin.

And CK Asset offered free high-speed rail travel packages – worth HK$840,000 (US$107,000) – to the first three buyers of four-bedroom flats that had not yet been sold at the Ocean Supreme development in Tsuen Wan.

“The trade war has not been resolved and is likely to worsen further, dragging the Hang Seng Index to lower than 25,000,” Chan said. “This has led to [property] market worries about the prospects and confidence of the market. The [property] market has seen fewer investments. Users are also adopting a wait-and-see attitude. Homeowners therefore need to cut prices by a greater extent if they wanted to sell homes.”

Chan said the price decline is likely to continue through the rest of the year, leaving used home prices down by 5 per cent for the year as the trade war worsens and the stock market drops further.

Some banks, such as CLSA, have predicted the overall housing market will fall up to 15 per cent in the coming 12 months.

Morgan Stanley on Wednesday became the latest bank to predict a sharp fall in local home prices, by more than 10 per cent in the coming six months because the market is in a down cycle similar to the one it experienced in 2015.

Bank of America Merrill Lynch said the price drop of overall home price could amount to 5 per cent next year and 10 per cent in 2020 under rising interest rates in a report published early this month.

“The market is facing a problem. The slide has started,” said Eddie Hui Chi-man, professor at the Department of Building and Real Estate at Hong Kong Polytechnic University.

Property agencies are already moving to lay off unproductive agents.

Centaline Property Agency has stopped expansion and will lay off agents who aren’t selling homes.

“At least a quarter of agents could lose their jobs,” Louis Chan, Asia-Pacific vice-chairman and chief executive of the residential division at Centaline, said on Tuesday.

Commission revenue at Centaline in October amounted to only about HK$150 million, leading to a loss of about HK$100 million, Chan said. The agency plans to issue warning letters to about 500 agents who made less than HK$100,000 in commissions in the first 10 months of this year.

He likened the downbeat sentiment of the current property market to what happened during the SARS epidemic in 2003, which led to a low turnover.

Chan also predicted that new launches by the end of the year will sell at discounts of 10 to 20 per cent.

Rival Midland Realty, the only listed property agency in the city, has put the 100 agents with the worst performances on a list in which the 10 least productive will be forced out and the next 55 will have to apply for non-paid leave, Sammy Po, chief executive of residential division at Midland, said on Tuesday.

The last time Midland exercised the “bottom list” system was back in the housing downturn in 2015. For the first time, it is allowing agents to go on non-paid leave to do part-time jobs.

Chan from Ricacorp said the number of agents competing for each transaction has been high and the lay-offs would reflect a survival of the fittest process.

Hong Kong had 39,834 agents in September, according to Estate Agents Authority, while the number of transactions amounted to only 4,799, according to Midland. This means more than eight agents competed for each transaction.