HONG KONG, CHINA - Demand for residential property is seen picking up in key Asian cities, according to a Reuters poll.

Said Mr Aaron Fischer, head of property research at CLSA: 'Liquidity in the market place is affecting property in Hong Kong and Singapore, particularly at a time when interest rates are low.'

Hong Kong looks the healthiest of three markets covered in the poll - which also includes Singapore and Tokyo - as apartment prices have rebounded 15 per cent this year from a slump.

But analysts warned that the rally is driven mostly by liquidity and is losing steam as the economy could shrink up to 6.5 per cent this year, based on the government's forecast.

The poll showed Hong Kong home prices will be flat for the rest of this year but rise 10-15 per cent next year.

In Singapore, demand is picking up but strong supply means apartment prices are poised to fall 6.8 per cent between now and the end of the year, before recovering 4 per cent next year.

Tokyo home prices are likely to drop 10 per cent between now and the end of the year and fall 6.3 per cent next year.

In Singapore, monthly apartment sales have tripled since February as prices are down 20 per cent since the middle of last year. Developers, including City Developments and UOL, have stopped discounting new projects and, in some cases, are raising prices slightly, although overall prices remain weak. - REUTERS