The latest cooling measures from the government of the Hong Kong Special Administrative Region may lead to a price drop of 10 percent in the residential sector, real estate service provider Colliers said in a report on Friday.

Those tightening measures, including the doubling of special stamp duty for properties worth more than HK$2 million ($258,000) and tighter stress testing for mortgages, will further blunt the appetite of investors for residential properties despite the low-interest-rate environment and abundant capital available in the market, according to the report.

Consequently, the volume of local residential transactions is expected to decrease in the short term, while mass and luxury residential prices are projected to fall by 10 percent over the next 12 months. Similarly, residential rents are likely to decline by an average of 4 percent in the next 12 months, according to the report.

Meanwhile, less-favorable financing terms and increased buying costs are expected to make potential buyers more cautious about their decisions.