The recent uptick in the city’s housing market should be viewed with caution, as improving sentiment could prove short-lived once the weight of the trade war and other headwinds factor back into view, according to new research from DBS Bank (Hong Kong). Hong Kong’s housing market is set for a year or negative returns, with a likely drop of 10 per cent, according to the Singaporean bank, which believes there is little that can stop the correction in asset prices. “When buyers realised that there are continuing uncertainties and gloomy outlook about global and regional economies, they will have second thoughts,” said Jeff Yau, a senior research director at DBS. “The market seems to be better just because it is not as bad as we think half year ago, it does not mean we are in good shape.” In a sign of the looming slowdown, Hong Kong’s real GDP growth eased to 1.3 per cent in the fourth quarter last year, the lowest since the first quarter of 2016. “If China-US dispute could not be resolved satisfactorily, China’s economy would face challenges with negative repercussions on Hong Kong’s economy,” Yau said, pointing to the impact prolonged trade tension between China and US would have on the world’s most expensive property market. Among other headwinds, smaller developers are expected to offer steep price reductions in areas where large numbers of new homes are under construction, such as Tai Po and Tuen Mun. Both communities are expecting thousands of new homes to be released by developers this year. Most vulnerable to steep discounting are smaller developers such as Billion Development and Project Management, Great Eagle Holdings and Chinese developer, China Evergrande, according to DBS. The downbeat view by DBS contrasts with the more upbeat outlooks by Citi, CLSA, Nomura, JPMorgan Chase&Co, and rating agency Standard & Poor’s .which have said the market correction will be short lived, with prices likely to end the year with a gain of up to 15 per cent. In a sign of the pent-up demand, more than 2,000 people visited the sales office for the Vantage last weekend, a project by Henderson Land Development featuring 246 flats. Hong Kong’s first-home buyers snap up Henderson’s Vantage flats in Hung Hom, giving respite to declining property prices A multi-year bull market for Hong Kong housing came to end in August last year. By the end of December the cumulative loss for home prices was 9.2 per cent, according to data by the city’s Rating and Valuation Department. Meanwhile data from local agency Centaline Property shows that secondary homes have risen for the past four weeks, after sliding 10 per cent in the seven months through January. Statistics from the Land Registry showed 2,279 homes were sold on the secondary market in February, a rise of 4 per cent from January.