A Turning Point: Hong Kong Property Sector Reverses Multi-Year Decline in 2025

Hong Kong’s secondary residential property market demonstrated continued resilience in November, marking the sixth consecutive month of price appreciation and signaling a robust recovery following several years of decline. Data from the Rating and Valuation Department indicates that the official price index reached 297.3, its highest point in sixteen months. This upward trajectory represents a 3.52 percent increase year-to-date, driven by favorable macroeconomic factors such as anticipated interest rate reductions, stabilized geopolitical relations, and a recovering equities market. While a tragic fire in Tai Po and focus on local elections are expected to cause a slight deceleration in transaction volume and price growth for December, the overall annual performance remains on track to reverse the downward trend observed since 2021.

Despite this positive momentum, the market remains approximately 25 percent below its historical peak, and growth continues to be tempered by a substantial inventory of unsold new units. Developers have focused on inventory clearance by offering competitive pricing and financial incentives, leading to a record-breaking year for primary market transactions, which are projected to reach 20,000 units by year-end. This strategy has successfully stimulated demand, particularly for properties priced below HK$10 million, though it has simultaneously restricted the pace of price growth in the secondary market. Experts suggest that a more definitive price rebound is contingent upon the absorption of an additional 12,000 to 13,000 units, a milestone unlikely to be reached until mid-2026.

Concurrently, the rental sector has shown exceptional strength, with the rental index hitting its second consecutive record high in November. This growth, which has outpaced the gains seen in 2024, is largely attributed to government initiatives aimed at attracting global talent, which have bolstered the high-income tenant demographic. Looking forward to 2026, analysts anticipate that while developers will continue to introduce significant new supply across various districts, the gradual narrowing of discounts and the stabilization of the labor market will likely support a more sustained and meaningful recovery in both property values and rental yields.