There has been a dramatic turnaround in the annual price growth of luxury homes in three major locations in Asia according to a report by Knight Frank.

In Hong Kong prices have declined to 7.8% from 19.7% a year earlier, whilst in Singapore and Shanghai prices have fallen to -6.8% and 3.8% from 15.8% and 29.7% respectively.

Experts are now debating whether the respective governments have gone too far with their anti-inflationary policies to combat the fear of a potential housing bubble similar to those in the US and EU markets.

Png Poh Soon, head of research, Knight Frank Singapore, said: “My view is that some governments, particularly China’s, may have considered the issue but most are currently defending the measures. They argue that prices need to be kept in check against a combination of strong inward investment and an inflationary climate.

“In Singapore for example, falls in luxury house prices have been driven as much by the EU debt situation, the possibility of a double-dip in the US and stock market volatility.

“Is there a chance of control measures being relaxed? I think it is very unlikely. Despite price falls, the volume of sales in the market is proving resilient.

“Certainly in Singapore, while domestic fundamentals remain positive, with unemployment rates and interest rates remaining low, it is unlikely that housing market control measures will be rescinded or weakened.”