Property markets in Singapore and Hong Kong have been driven relentlessly higher for years, but now both cities could be facing a double-whammy of higher interest rates and a surge in new supply.
"We saw both of these markets really pushing into what was feared to be bubble territory," in the wake of the U.S. Federal Reserve's quantitative easing measures, said Peter Churchouse, publisher of the Asia Hard Assets Report.
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Both cities took measures to cool their property markets and those steps are starting to work, with transactions dropping sharply, although prices haven't fallen much yet, he said.
"The prospect as we look forward into 2014 is that we're going to be flat to down in both of these markets, and possibly even more so in Hong Kong than even in Singapore," Churchouse said.
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"In both of these markets, you've got significant increases in supply coming on stream over the next couple of years. That supply is probably going to come on line just as interest rates start rising," he added. "So you're going to have a double whammy effect."
In Hong Kong, CIMB expects these factors could spur a two-stage decline in property prices.
"We have now entered the first stage, where dampened demand and higher end-supply are likely to weigh on property prices," said Andrew Lawrence, an analyst at CIMB, in a note, adding he expects a slow, orderly decline for now.
Rising rates will make the second stage a bigger risk for prices, with a potential for huge oversupply, he said. "Rising rates, in our view, will encourage secondary stock to return to the market as investors/speculators rush for the exit in an illiquid market," he said.
CIMB estimates these secondary units could potentially increase net supply by nearly 60 percent over the next five years, even as the potential new housing units in 2014 could be nearly four times demand, based on end-2013 inventory and projections for unsold completions.
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In addition, in what could be a red flag for a negative feedback loop for supply and prices ahead, Lawrence expects developers will increase pre-sales in an attempt to lock in current, already-discounted prices.
"Should property prices fall, a number of buyers could walk away from their deposits, either because they no longer see the economic point of completing their transactions or they simply cannot sell their existing units for what they think they are worth," Lawrence said. "This implies that sales levels are less secure than in the past and that should property prices fall, more primary stock could return to the market."
CIMB expects Hong Kong property prices to fall 10 percent in 2014 and 15 percent in 2015.
Singapore's property market is also expected to continue cooling off this year.
"Trends show increasing price sensitivity among genuine buyers, resulting in significantly lower sell-through rates for high-priced new launches," Tricia Song, an analyst at Barclays, said in a note. "February could see some price-cutting as competition for the smaller pool of buyers heats up."
The city-state's private home prices fell 0.9 percent in the fourth quarter from the previous three months, the first decline in seven quarters.
Meanwhile, Piyush Gupta, CEO of the region's largest bank DBS, is forecasting a 10-15 percent drop in prices this year, according to local media reports.
Song expects sales volumes will fall 20 percent this year, with prices set to decline around 5 percent in 2014 and another 5-15 percent in 2015 as interest rates rise. She estimates the vacancy rate could rise to an "unprecedented" 9.9 percent by 2016 from less than 6 percent in 2013.
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1