Home prices stabilize and rebound — is Hong Kong’s property market turning the corner?

(Hong Kong, Jan 28)
After three consecutive years of declines, Hong Kong’s residential property market appears to have turned a corner last year. Improving sentiment—supported by lower interest rates and a decline in inventory—helped lift home prices to their first annual gain since 2021.

According to the Rating and Valuation Department, Hong Kong’s private home prices rose 3.3% over the year. In December, prices edged up 0.2% month-on-month, marking the seventh straight monthly increase. November’s revised monthly rise stood at 1.1%.

The shift has raised expectations that the market may have bottomed out. Over the previous three years, high mortgage rates, a weaker economic outlook, and an outflow of professionals contributed to a near-30% drop from the 2021 peak in one of the world’s least affordable housing markets.

Support measures gain traction

Since 2024, the Hong Kong government has rolled out a series of measures aimed at stabilizing the housing market, including removing certain purchase restrictions and easing down-payment requirements.

Official data suggest a gradual improvement in the secondary market. The price index has posted positive month-on-month gains for seven consecutive months, pointing to a steady recovery.

In the primary market, developers have used discounts to boost sales, which has partially capped price momentum in the resale segment. Even so, transaction volumes have remained relatively stable, offering support to prices.

Monetary easing provides a tailwind

Hong Kong’s major banks cut rates in October 2024—the fifth rate cut since September 2024—tracking the U.S. Federal Reserve’s shift toward easier policy. Because the Hong Kong dollar is pegged to the U.S. dollar, local monetary conditions tend to move in step with the U.S.

Lower borrowing costs have been a key factor behind the rebound, while declining inventory levels have provided supply-side support.

Cautiously optimistic outlook

Analysts say the market is in a bottoming-and-recovery phase, but this year’s performance will depend on several factors, including the pace of rate cuts and equity market conditions.

CBRE expects prices to rise 3% to 5% this year, citing a wealth effect from last year’s stock gains and stronger developer interest in recent land tenders. Morgan Stanley is more bullish, forecasting a 10% increase on the back of improving investment demand, firm rental trends, and continued inflows of talent and students from mainland China.