CBRE: Hong Kong property market enters an upward cycle, with prices expected to rise by 8-10% in 2026.

The Rating and Valuation Department of Hong Kong announced that the private residential price index for March rose to 312.8, reaching a new high in over two years. It has been increasing for 10 consecutive months, with a monthly growth rate narrowing to about 1.4% and an annual growth rate expanding to 9.8%. The cumulative increase for the first quarter of this year is 4.4%. Looking ahead, Savills predicts that Hong Kong's residential property market will continue to be in an upward cycle by 2026. With easing supply pressure and developers pricing more aggressively, the property prices are expected to increase by about 8-10% for the whole year if there are no major reversals in the macro environment. Overall, the property market is gradually transitioning from the "destocking phase" to the "steady recovery phase," with market dominance slowly shifting from buyers back to developers. Guo Wei'en, Executive Director of Valuation and Advisory Services at Savills Hong Kong, said that the overall market sentiment in Hong Kong is significantly improved compared to last year, with investment sentiment warming up in both the capital market and the property market. IPO market sentiment has improved compared to last year, reflecting the market's confidence in the economic outlook and corporate profitability. Increased capital inflows have indirectly boosted the performance of asset markets. In terms of the primary property market, new projects launched by developers have been well received, with sales performance generally strong. Some projects even experienced situations where units were sold out or oversubscribed within a short period, indicating a recovery in actual user and investor demand. Since hitting a low last year, the property market in Hong Kong has been experiencing a continuous rebound, which has continued into this year. In the first quarter of this year alone, residential property prices have cumulatively increased by about 4.4%, reflecting not only improved market sentiment but also a close relationship with the changing supply structure. Over the past two years, developers have adopted a more active destocking strategy to cope with high interest rates and financial pressures, facilitating the digestion of accumulated unsold units through more discounts, offers, and payment arrangements. As these unsold units continue to be absorbed, the overall inventory of unsold primary units has significantly decreased. According to the bank's current market observations, the discounts offered on primary sales are gradually narrowing, with some large developers reducing discounts or even starting to slightly increase prices in subsequent phases or new projects to test market acceptance. This also reflects developers' growing confidence in future market conditions. From a demand perspective, actual users continue to be the main support of the market, and with expectations of lower interest rates in the future, there are signs of renewed investment demand entering the market. Coupled with the gradual normalization of economic activities, population inflows, and the arrival of high-end talents, these factors provide medium to long-term support for the residential market.