Why it matters

Housing prices in Hong Kong, known as one of the most unaffordable cities globally, have fallen nearly 30% since a peak in 2021. This decrease has been attributed to climbing mortgage rates, bleak economic forecasts, and diminished demand due to strict Covid-19 regulations and national security laws that have led to a departure of professionals.

The government has attempted to support the real estate sector—an essential component of the economy—since 2024, by lifting restrictions on property acquisitions and easing down payment ratios.

Property developers have turned to offering new apartments at lower prices to enhance sales, which has adversely affected the second-hand market, as seen in the official pricing data.

In October, major banks in Hong Kong reduced interest rates for the fifth time since September 2024, following similar easing measures by the U.S. Federal Reserve.

Hong Kong's monetary policy generally aligns with that of the U.S. due to the currency's peg to the dollar.

What lies ahead?

Experts believe that Hong Kong's real estate market is nearing a bottom, with consistent transaction volumes providing a cushion. They indicated that price fluctuations this year will hinge on the speed of interest rate reductions, the intensity of Sino-U.S. trade tensions, and the performance of the equity market.

CBRE Hong Kong Executive Director Eddie Kwok anticipates a 3-5% increase in home prices by 2026, pointing to a stock market upturn last year that generated a wealth effect and attracted more buyers. He also noted strong developer interest in an upcoming land auction this month as an indicator of positive market sentiment.

Morgan Stanley analyst Praveen Choudhary predicts a 10% increase in 2026, supported by rising investment interest and favorable rental trends, fueled by a steady influx of talent and students from mainland China.