Hong Kong’s high-flying residential property market is showing signs of serious strain, with home prices seen falling by double digits over the next 12 months as a mix of domestic and international factors slam the sector.

Property is a central to the economy of Hong Kong, a densely populated territory spread over numerous small and hilly islands and a narrow peninsula in southern China.

Hong Kong is perennially ranked as one of the world’s most expensive real-estate sectors and is closely watched along with the local stock market as an indicator of the health of the broader economy.

But after years of steady increases, prices are set for a sharp decline with sentiment on a knife-edge, according to investment group CLSA.

“Hong Kong’s property market is having its worst combination of fundamentals in 15 years with rising interest rates, a slowing economy and a depreciating Rmb,” CLSA analyst Nicole Wong said in a report, using an abbreviation for the renminbi, or mainland Chinese currency.

“Sentiment could deteriorate at any time as prices are unaffordable,” Wong added in the report, released Tuesday. “We expect a 15 percent correction over the next 12 months,” she added, noting prices have risen 14 percent so far this year.

Wong said that the local HIBOR — or Hong Kong Interbank Offered Rate — is approaching two percent after staying under one percent for most of the past nine years.

A double-digit slide in the local stock market this year and a nine percent fall in the Chinese yuan rounded out the trifecta of negative factors, according to the report.

A weaker Chinese yuan against the U.S. dollar makes Hong Kong property less attractive to mainland Chinese buyers. The Hong Kong dollar is pegged to the U.S. currency in a narrow band.

CLSA is not alone in predicting choppy waters ahead for Hong Kong’s residential property sector.

Investment bank Nomura in a report earlier this month said that banks have started raising mortgage interest rates and noted that during the past two rounds of such increases since 2008 property prices dropped by five percent and 13 percent, respectively.

Higher rates make it harder for homeowners to pay off their housing loans and can dissuade new buyers from entering the market.

In a bid to impede the rise in housing prices, the Hong Kong government in late June announced the implementation of a tax on new apartments that remain vacant in a bid to end speculation and increase supply.

The move is pending legislative approval but appears to already be having a psychological effect, as have concerns about the U.S.-China trade war.

Real estate consultancy Knight Frank said in its monthly report on Hong Kong property for August that given those factors, it still expects prices to keep rising the rest of this year, albeit at a weaker pace.

“In light of the government intervention and external uncertainties, we expect home prices to grow at a slower rate in the second half of the year,” Knight Frank said.

Still, it said it expects residential prices to still log an increase of between 10-13 percent for all of 2018.

Some remain outright bullish on residential property over the long term.

Real estate services and investment manager Colliers International said in a report this month that it expects the government efforts on housing to yield little impact on prices.

“Looking forward, solid economic fundamentals and a land shortage of 108 ha (hectares) up to 2026 should support price growth of 5-10 percent per annum for the next five years,” it said.

108 hectares is equivalent to 267 acres.