The arrests of Raymond and Thomas Kwok, the billionaire brothers behind Sun Hung Kai Properties, have led to a 13 per cent slump in the shares of one of Asia’s biggest property companies. The Kwoks were released on bail on Friday along with Rafael Hui, a former top government official. Inquiries are proceeding in Hong Kong’s most prominent corruption investigation. The share price fall, however, looks mild. Investors cannot properly gauge the impact of the investigation on the company, which has the most solid financial base in the Hong Kong property sector. It was rated A-plus by Standard & Poor’s this month, second only to the Hong Kong government’s urban renewal authority. However, S&P and Moody’s put the company on “watch negative” on Friday.

There are separate reasons to be bearish about Hong Kong’s property market. Three other property stocks, unconnected with the enquiries, rounded out the top four losers in the Hang Seng index on Friday. The sector is the biggest homegrown one in the China-heavy index. Calling a top to Hong Kong’s dizzy property prices has been a mug’s game: the 10 per cent decline in the Centa City index in the second half of 2011 has been almost reversed this year, leaving prices back near last June’s records. Since late 2008, when the market last bottomed, the index has risen 85 per cent. There is plenty to argue that prices should not rise further: higher mortgage rates and larger deposit requirements have contributed to a near-50 per cent drop in seven months in the value of new home loans drawn each month. Property prices in Hong Kong are about 11 times household incomes – twice the ratio of New York.