Hong Kong property prices are expected to rise by 3.3% in 2025, marking the first annual increase in four years

Hong Kong residential property prices have reached a turning point after three years of decline. Interest rate cuts and reduced inventory have improved market sentiment, with property prices recording their first annual increase since 2021 in the full year of 2025. Data released by the Hong Kong Government Rating and Valuation Department on Wednesday showed that private residential property prices rose by 3.3% for the full year of 2025. Prices increased by 0.2% month-on-month in December, marking the seventh consecutive month of growth, following a revised increase of 1.1% in November. This shift indicates that the Hong Kong property market may have bottomed out. Over the past three years, property prices in Hong Kong, one of the world's least affordable cities, have cumulatively fallen nearly 30% from their peak in 2021, affected by high mortgage rates and a weak economic outlook leading to a loss of professionals. Starting in 2024, the Hong Kong authorities launched a series of measures to boost the market, including lifting home purchase restrictions and relaxing down payment ratios, in an effort to support this key economic pillar. Seven Consecutive Months of Month-on-Month Increases Official data reflects the price dynamics of the secondary market. The Rating and Valuation Department's data shows that property prices have recorded positive month-on-month growth for seven consecutive months since June 2024, indicating a steady market recovery. In the primary market, developers have adopted discount strategies to stimulate sales of new homes, which has somewhat suppressed prices in the secondary market. Transaction volumes remain stable, providing support for prices. Monetary Policy Shift Provides Momentum Hong Kong's major banks cut interest rates in October 2024, marking the fifth rate cut since September 2024, following the U.S. Federal Reserve's easing of monetary policy. Due to the peg of the Hong Kong dollar to the U.S. dollar, Hong Kong's monetary policy remains in sync with that of the United States. The downward cycle of interest rates has reduced financing costs for homebuyers, becoming one of the key factors driving the rebound in property prices. The decline in inventory levels has also supported prices from the supply side. Market Expectations Cautiously Optimistic Analysts believe that the Hong Kong property market is in a bottoming phase, but this year's trends will depend on multiple factors, including the pace of interest rate cuts and stock market performance. Eddie Kwok, Executive Director of CBRE Hong Kong, expects property prices to rise by 3-5% in 2026. He noted that the wealth effect created by last year's stock market rise has encouraged more buyers to enter the market, while strong interest from developers in this month's land auctions indicates improved market confidence. Morgan Stanley analyst Praveen Choudhary predicts that property prices will rise by 10% in 2026, citing increased investment demand and strong rental trends, with a continuous influx of talent and students from the mainland providing support