Cash-strapped Chinese are scrambling to sell their luxury homes in Hong Kong, and some are knocking up to a fifth off the price for a quick sale, as a liquidity crunch looms on the mainland.

Wealthy Chinese were blamed for pushing up property prices in the former British territory, where they accounted for 43 per cent of new luxury home sales in the third quarter of 2012, before a tax hike on foreign buyers was announced.

Slowdown: Chinese buyers accounted for 43 per cent of new luxury home sales in the third quarter of 2012 before a new tax was introduced. Credit:iStock

The rush to sell coincides with a forecast 10 per cent drop in property prices this year as the tax increase and rising borrowing costs cool demand. At the same time, credit conditions in China have tightened. Earlier this week, the looming bankruptcy of a Chinese property developer owing 3.5 billion yuan ($620 million) heightened concerns that financial risk was spreading.

"Some of the mainland sellers have liquidity issues - say, their companies in China have some difficulties - so they sold the houses to get cash," said Norton Ng, account manager at a Centaline Property real estate office close to the China border, where luxury houses costing up to HK$30 million ($4.3 million) have been popular with mainland buyers.