Hong Kong private home prices fell for the first time in 29 months in August and are expected to soften further as interest rates rise and the Sino-US trade war clouds the outlook for the city's economy. 

Prices eased 0.076% last month from July, government data showed. 

While slight, it marked first decline since March 2016, a cooling sign for one of the world's more expensive property markets. 

Prices have surged 11.7% so far this year, and rocketed 16% year-on-year, according to Reuters' calculations based on an index compiled by Hong Kong's Rating and Valuation Department. 

Ultra low interest rates, limited housing supply and large flows of capital from mainland Chinese buyers helped push housing prices up 165% over a decade.

This has prompting repeated warnings from authorities about the risks of an asset bubble. 

Soaring property prices have angered many Hong Kong residents and prompted the city's government to set aside plots of land for public housing and propose a vacancy tax on empty new homes to discourage developers from hoarding. 

The latest UBS Global Real Estate Bubble Index ranked Hong Kong as the city with the greatest bubble risk. 

People who earn the average annual income in the highly skilled service sector would need to work 22 years to afford a 60 square metre (646 sq ft) flat, surging from 12 years required 10 years ago, the study showed. 

A flat of that size on Hong Kong Island cost an average of HK$10.8m ($1.38m) in August, according to official data. 

But the days of cheap money are coming to an end.

Hong Kong commercial banks raised their benchmark lending rates on Thursday for the first time in 12 years, increasing the cost of home mortgage repayments. 

More hikes are expected into 2019.