The city’s second-hand home price index rose 1.6% during the month to a 22-month high, having risen 1.03% in January alone, according to data released on Friday by the Rating and Valuation Department, as reported by South China Morning Post.
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An aerial view of apartment blocks in East Kowloon in Hong Kong on February 24, 2025. Photo by AFP |
This extended the residential market’s streak of gains to 11 consecutive months, as rents reached another peak.
The latest figures do not yet capture uncertainty surrounding interest rates amid surging oil prices driven by the U.S.-Israel war on Iran, which began on February 28.
“Tensions in the Middle East have not had any immediate impact on the Hong Kong residential market,” said Eddie Kwok, executive director for valuation and advisory services at CBRE Hong Kong.
“However, if the situation persists and oil prices continue to rise, thereby fuelling inflation and leading to an upward turn in interest rates, it would have a negative effect.”
Realtors projected that prices will rise 3%-10% this year, while brokerage analysts forecast gains of at least 10%, citing a resilient stock market, strong demand from mainland Chinese buyers and lower inventory, Reuters reported.
Demand for home buying in Hong Kong, among the world’s least affordable cities, improved in the past couple years partly due to softening interest rates.
Prices have tumbled nearly 30% over the past five years, weighed down by higher mortgage rates, subdued economic prospects and reduced demand as strict Covid-19 policies and national security laws prompted an exodus of professionals.
The Hong Kong Monetary Authority cautioned that the direction of U.S. monetary policy remains uncertain, adding that the “public should carefully manage interest rate risks when making decisions about property purchase, investment or borrowing”.
Hong Kong’s monetary policy tracks that of the U.S. to preserve the local currency’s peg to the U.S. dollar.
U.S. financial services firm Morningstar forecasts a 3% to 5% increase in home prices this year, describing Hong Kong’s residential sector as “relatively resilient” and “currently in a recovery phase.”
Meanwhile, the Hong Kong interbank offered rate (Hibor), a key benchmark for mortgage and corporate borrowing costs, has been trending lower since the fourth quarter of last year, with a cumulative decline of more than 100 basis points.
“Should Hibor remain low, lower borrowing costs will further encourage buyer participation in the residential market and help support housing prices,” Kwok said, as cited by South China Morning Post.
Preliminary findings from the Rating and Valuation Department’s annual review of supply and activity showed that completed private residential units fell to 18,450 in 2025, down from a peak of 24,260 in 2024.
Hong Kong Property Services (Agency) said the drop in completions is likely to underpin sales.
It is expected that completions will continue to decline over the next two years, dropping to 16,980 units in 2026 and further to 15,360 units in 2027, down by more than 35 per cent compared with the 2024 peak, said Peter Wong, director of Hong Kong Property’s research department.
“It reflects that supply will continue to tighten in the coming years.”
Rents also edged higher, rising about 0.05% in February and lifting the rental index to 200.8, marking a fourth consecutive record high.
“Rental prices are expected to continue their steady upward trend in 2026, rising by another 3% to 5% year on year,” said Martin Wong, director and East Asia asset-management leader at U.K. multinational firm Arup.
