Hong Kong Financial Secretary John Tsang said he’s ready to step in if there are signs of overheating in the property market and warned property buyers not to “blindly” follow the market.

“I remain highly concerned about the risk of a price bubble” as the low interest environment persists, Tsang said in a Chinese-language blog posting on a government website yesterday.

According to Centaline Property Agency, Hong Kong’s housing prices rose more than 70% between the start of 2009 and mid-2011 on record low mortgage rates and an influx of mainland Chinese buyers. Prices have risen almost 4% this year, after falling about 5 % in the second half of 2011.

Buyers shouldn’t believe that property prices will only rise and never fall, Tsang said.

Several analysts are suggesting the market is headed for a downturn of as much as 30 percent. “We believe the Hong Kong property market is overheating, raising the possibility of a sharp correction in prices,” Bei Fu, a credit analyst at Standard & Poor’s, wrote in a report last year.

Andrew Lawrence, head of Asian real estate research for Barclays Capital, was even more precise saying that a top in the market was reached mid last year. “Affordability is going to decline as mortgage rates go up, and people’s purchasing power will fall.” He is predicting a 25 – 30% fall in property prices going into 2012.

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