Home prices could plunge by 25%

Tougher government measures to prevent an asset bubble likely to cause this.

Deutsche Bank AG forecast a price cut of as much as 20 percent over the next two years as a result of these new measures, On the other hand, property consultants Sanford C. Bernstein H.K. Ltd believes prices will fall even farther, by 25%.

It also believes developers will shift their focus to cheaper and smaller units to improve sales.

An index tracking home prices dropped the most in almost three years in the week ended April 14 after the government introduced its toughest measures to cool prices on Feb. 22.

Cheung Kong Holdings Ltd is expected to make more price cuts to boost sales. The property firm last month cut prices by almost 10% at a project in response to the government curbs.

Analysts are advising investors to sell Henderson Land Development Co. because of its strong competition with Cheung Kong, and Sino Land Co. that has large exposure in larger units within its own portfolio.