Analysts claiming the sky is falling on Hong Kong's property segment, with predictions prices could decline as much as 30 percent by the end of 2015, may just be playing the fabled Chicken Little, frightened by an acorn.
"We are not expecting a boom-bust scenario," Morgan Stanley said in a note.
"Strong end-user demand backed by low unemployment rates, increasing numbers of new marriages and babies continue to support the mass-market projects," the bank said. "(The) recent discount model on luxury projects is also working well," it said, noting inventory is clearing at discounted prices and generating decent margins for developers.
To be sure, Morgan Stanley expects Hong Kong's residential property prices to fall around 10 percent in 2014 in anticipation of higher real interest rates and rising supply, but it believes a recurrence of the property-price crashes in the 1997 Asian financial crisis or the 2008 global financial crisis is unlikely amid minimal levels of speculation and the absence of an external shock.
"In 1997, property speculation was rampant with the ratio of mortgage payment to median household income peaking at 140 percent in the second quarter of 1997, compared to 55 percent now. The 2008 scenario is also atypical given the prevalence of external shock – the global financial crisis – at the time," it said.
Recent sales in the primary market might support a less-than-catastrophic view for the segment.
"Some of the recent new launches have received a satisfactory response, with most units sold on the first day," said Jonas Kan, an analyst at Daiwa, in a note.
"Market demand has not been as bad as many assumed it would be," he said. "Developers are not embarking on a vicious price war or giving away their margins for cash."
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Indeed, Kan said the rebates developers are offering are mitigating the government's sector-cooling measures and helping to shed light on actual underlying demand, adding that in the local market, improving investment demand tends to speed up the pace of the pickup for end-user demand.
He expects a period of consolidation for the residential sector after "being on the up" for around 10 years, forecasting a 10-15 percent price decline in 2014.
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BNP Paribas also noted strong sales of high-end projects in prime locations, with 100 percent take-up of the units launched over the weekend; on November 2-3, 247 units sold in the primary market, up 19.3 percent from the previous weekend.
"Attractive pricing has attracted strong demand from buyers. We expect developers to accelerate high-end launches," it said in a note.
Doomsayers, however, are sticking by their guns.
"That first round of price cutting has been effective and we've been able to draw some demand, but as we continue to see more and more of these price cuts come through, we'll see demand start to pull back," Paul Louie, an analyst at Barclays, told CNBC. "Buyers will return to the sidelines. They'll wait for the better deals."
He also noted household incomes in Hong Kong are stalling, while property purchase prices are running around 13.3 times income, higher than in 1996-1997.
"In order to maintain that unaffordability, the hope value that people's income can catch up over time is very important. But as income begins to stall, that unaffordability is going to become very real for a lot of people," he said.
Louie has forecast an at least 30 percent drop in home prices by the end of 2015, with knock-on effects to send office property prices down 20 percent and stall retail properties with zero growth.
— By CNBC's Leslie Shaffer. Follow her on Twitter: