“Housing prices have bottomed out, and the outlook for 2026 is cautiously optimistic,” said Joseph Tsang Hon-ping, chairman of JLL in Hong Kong, as reported by the South China Morning Post.
“We expect capital values to rise by about 5%, while luxury residential values will remain broadly flat. Luxury rents are projected to increase by up to 5%.”
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An aerial view of apartment blocks in East Kowloon in Hong Kong on February 24, 2025. Photo by AFP |
Such a trend would be a boost for a market that has been in decline since late 2021.
Echoing JLL, Cushman & Wakefield noted that recent tax adjustments and a rebound in Hong Kong’s stock market are also expected to help stabilize the city’s residential property sector.
JLL analysts added that these factors are likely to bring developers’ elevated inventory back to normal levels by the end of next year.
Official data shows that lived-in home prices fell as much as 28.4% in March from their September 2021 peak.
With home sales up more than 20% year on year as of November, unsold inventory has eased, according to JLL.
The firm estimated that unsold stock would be equivalent to more than 51 months of supply by year-end, aligning with the average level between 2015 and 2021.
Private housing supply was also expected to return to normal by the end of 2026, requiring almost 45 months to absorb existing stock, JLL said. Second-hand home prices have risen 1.8% so far this year.
For new launches, about 30% of buyers were from the mainland, a figure that exceeded 60% for projects in Kai Tak and Kowloon Station.
In the luxury segment, defined as units priced at HKD100 million (US$12.85 million) or above, more than 90% of buyers were mainlanders, said Norry Lee, senior director of projects strategy and consultancy at JLL.
Some projects are recording exceptionally high prices. A duplex apartment at The Legacy recently sold for HKD880 million, a new record in the city, according to Bloomberg.
Hong Kong’s residential property market has shown improving sentiment in recent months after prices dropped about 30% from their 2021 peak, according to the Centaline Property Centa-City Leading Index, a benchmark for the city’s home prices.
“Hong Kong is showing the first signs of recovery, supported by interest rate cuts that have helped to stabilize financing conditions,” Liam Bailey, global head of research at Knight Frank, wrote in a report last week.
Cushman said the number of mainland buyers in Hong Kong was likely to keep rising as rental prices have reached historic highs.
“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.”
CBRE said homes costing up to HKD4 million made up a quarter of residential sales in 2024, and the lower tax was expected to raise the segment’s share to 30%.
