Home prices in Hong Kong could drop as much as 25 percent in the next two years, as new government regulations and rising mortgage interest rates impact the market, analysts say.

Sanford C. Bernstein offered the most pessimistic forecast, predicting a 25 percent decrease in prices as new apartment sales will "remain largely subdued" in upcoming months.

As reported previously, many industry observers believe the Hong Kong boom may be over. New government regulations, including a 15 percent tax on purchases by foreign buyers, is expected to finally put an end to one of the largest run-up in property prices in the region. Despite the global economic crisis, Hong Kong prices have more than doubled in recent years.

But not all analysts agree on the extent of the drops.  UBS Investment Research predicts home prices will fall only 5 to 10 percent this year.

"We don't think home prices will drop as much as others have predicted because the supply problem is not yet solved," UBS head of Hong Kong and China property research Eva Lee told the South China Morning Post.

Deutsche Bank forecasts prices drops as much as 20 percent over the next two years, while Macquarie expects home prices to fall 10 percent this year.

But there are a wide range of opinions about the fate of the market. Puru Saxena, a Hong Kong money manager, recently noted that Hong Kong prices have fallen by 50 to 60 percent in previous boom-bust cycles. The current bubble in Hong Kong is "even bigger than the bubble we saw in the U.S."