The start-up’s research, based on algorithms taking into account past movements in Hong Kong’s residential property market, points to areas that have seen the biggest drop in sales over the six months ending February 28.

Based on 1.1 million property-listing searches on the spacious.hk website, the data shows which neighbourhoods have seen the biggest drops in asking prices.

The area that has seen the steepest decline on Hong Kong Island over the six-month period is Shek Tong Tsui, a neighbourhood between Sai Ying Pun and Kennedy Town, with a 15.11 per cent drop. Other areas where property prices have fallen include Repulse Bay (12.62 per cent), North Point (11.74 per cent), Quarry Bay (7.24 per cent) and Happy Valley (5.35 per cent).

In Kowloon, the figures reveal, the biggest price decrease was in Yau Ma Tei (13.92 per cent), followed by Hung Hom (3.83 per cent) and Tai Kok Tsui (3.45 per cent).

Asif Ghafoor, founder and CEO of Spacious, says the data was narrowed down to units under 1,000 square feet (93 square metres) to make the data more relevant to the general population.

“There has been a pretty steep decline over this six-month period. But the drop in prices for the likes of Shek Tong Tsui, Yau Ma Tei, North Point and Tai Kok Tsui is likely because they have been newly gentrified and it’s clearly an indication that they were overvalued due to this,” he says.

“These are places where investors have gone into the market and bought up a large amount of property gambling on it being gentrified, so it’ll attract more property buyers. The fall in price in these areas is probably a correction of this ­– they were overpriced to begin with.”

James Fisher, director of market analysis at Spacious, believes that Shek Tong Tsui is a good example of this, because of its proximity to the popular Kennedy Town neighbourhood.

“It’s a peripheral neighbourhood near to one that is very gentrified and trendy. Investors would definitely speculate that Shek Tong Tsui could be just as fashionable as Kennedy Town in the long run, and this drove the property prices up there,” he says.

Properties in Ap Lei Chau (down 3.67 per cent) on Hong Kong Island may also have suffered because they were overbought by investors due to the accessibility of the South Island Line of the Mass Transit Railway (MTR) system, which went into service in December 2016.

Since the South Island Line opened, property buyers have been strongly attracted to areas close to the four new MTR stations. Residents of Aberdeen through to Ap Lei Chau have seen their daily commute to the grade A office towers of Admiralty – which could take an hour by public bus – slashed to as little as 11 minutes.

Spacious says the sizeable drops in property prices in other neighbourhoods such as Happy Valley and Mid-Levels (down 4.13 per cent) are because they are areas favoured by expatriates working in the banking and financial sectors, which are downsizing in the city and retrenching staff overseas.

“We will adjust our selling prices if the property market is heading to a downtrend. But our projects would still have to make a profit as the sites were bought at lower cost years ago,” Chiu said. “Home prices will need to return to the level of end 2016 and early 2017 before the general public can afford to own a home.”

Fisher, however, believes that house prices may have now settled.

“Moving forward, our data markers are showing the market has bottomed and we expect it to stabilise, barring any external shocks. People are actually more optimistic and positive about the China-US trade war, for example,” Fisher says.

“From what we have seen, the prices have settled now and people are gradually moving back into the market. There is always a long-term mismatch of supply and demand in Hong Kong, but what we’re seeing is a correction in the market, not a collapse. It has stabilised – but compared to where the market was six months ago there are still bargains out there.”