Hong Kong home prices to rise in 2026 on the back of mainland Chinese buyers, rate cut

Hong Kong home prices are likely to see up to a 5 per cent boost in 2026 on the back of mainland Chinese buyers, interest rate cuts and fewer unsold new flats, according to analysts.\nIn addition, the stamp duty adjustment and Hong Kong’s resurgent stock market were also expected to help sustain stability in the city’s residential property market, according to JLL and Cushman & Wakefield.\nThose factors, JLL analysts said, were projected to help trim Hong Kong developers’ swollen inventory, which would drop back to their normal level by the end of next year.\n“Housing prices have bottomed out, and the outlook for 2026 is cautiously optimistic,” said Joseph Tsang Hon-ping, chairman of JLL in Hong Kong. “We expect capital values to rise by about 5 per cent, while luxury residential values will remain broadly flat. Luxury rents are projected to increase by up to 5 per cent.”\nShould that forecast unfold, it would be welcome news to the city’s housing property market, which has been in a downturn since late 2021.\nLived-in home prices fell by as much as 28.4 per cent in March this year from their peak in September 2021, according to official data. That slump came amid elevated inventory levels, which required 101.6 months and 67.4 months to clear in 2023 and 2024, respectively.\n\nWith home sales up more than a fifth on an annual basis as of November, unsold inventory had declined, according to JLL. It said it said that the number of unsold inventory would be equal to 51.3 months' worth of supply by the end of this year, which was the average level from 2015 to 2021.\nPrivate housing supply was also expected to normalise by end of 2026, requiring just 44.7 months to clear the current inventory, the property consultancy added. So far this year, second-hand home prices have risen 1.8 per cent.\nFor new home launches, JLL said about 30 per cent of buyers were from the mainland. That number exceeded 60 per cent for projects in Kai Tak and the Kowloon Station.\nFor the luxury residential segment or units that cost at least HK$100 million (US$12.85 million), more than 90 per cent of buyers were from the mainland, according to Norry Lee, senior director of projects strategy and consultancy at JLL.\n“We observed a significant increase in mainland buyers acquiring two to five flats in new mass residential projects for leasing this year, driven by the government’s removal of cooling measures and the continued rise in housing rents,” Lee said. “Previously, they typically bought only one new flat priced from HK$20 million to HK$30 million.”\n\nThe number of mainland homebuyers in Hong Kong was likely to increase in the coming year, as rental prices have surged to their historical peak in recent months, according to Cushman.\nCurrently, 20 per cent of homebuyers in the city had names in pinyin, the mainland’s system of romanised Chinese script, the consultancy said.\n“We expect their share to continue growing, but it will not surpass that of local buyers,” said Edgar Lai, senior director of valuation and advisory services at Cushman. “Due to capital controls, it remains difficult for them to transfer large amounts of capital into Hong Kong.”\nOther factors that have helped the city’s residential property segment were the reduction of the stamp duty on homes that cost up to HK$4 million to HK$100 from HK$60,000, which was announced by Financial Secretary Paul Chan Mo-po in February. Before that, the HK$100 incentive was only extended to homes priced up to HK$3 million.\n\nHomes that cost up to HK$4 million accounted for a quarter of residential sales in 2024, according to CBRE. The cut in the stamp duty was expected to increase the share of this segment to 30 per cent, the consultancy said.\nThe interest rate cuts by the Hong Kong Monetary Authority (HKMA), which resumed its easing stance in September, have also helped the city’s property market.\nIn October, the HKMA cut its base rate by a quarter point to 4.25 per cent, the lowest since November 2022, easing mortgage payments for borrowers.\nIn addition, the bellwether Hang Seng Index, which gained more than 30 per cent so far this year, had a wealth effect on residents, lifting sentiment for homebuying, according to JLL.\n