Hong Kong's runaway price growth in the world's least-affordable housing market be near an end, as residential property prices are expected to drop by 14% next year and wipes out all of this year's gain as mortgage rates rise according to Joyce Kwok, head of Hong Kong property research at Nomura International (HK) Ltd.

"Remember what happened in late 2015 - prices dropped about 13% in only six months, and the trigger was the Fed's rate hike," Kwock said in a briefing in Shanghai. "The situation may repeat."

Last month, Hong Kong lenders began to follow the US Federal Reserve by increasing mortgage rates, which led to the largest leap in home loan rates in five years.

HSBC Holdings Plc, BOC Hong Kong Holdings Ltd and Standard Chartered Plc lifted the cap for mortgages linked to the city's interbank rates to effectively 2.35%. Meanwhile, prime rate-based mortgages will rise to 2.25%.

Prices in the city have risen up to 14% this year, defying years of attempts by authorities to improve affordability. This ultimately leads to obstacles, including hefty stamp duties on foreign buyers, and lending restrictions.

Housing minister Stanley Ying stated on Monday that the government might consider imposing further curbs, the Hong Kong Economic Journal reported.