Hong Kong home prices post first annual gain since 2021

HONG KONG, Jan 28 (Reuters) - Hong ⁠Kong private home ⁠prices ‍rose 3.3% in 2025, marking the first rise since 2021, government data showed on Wednesday, as interest rate cuts and declining housing inventory ‍bolstered market sentiment.

BY THE NUMBERS

Home prices edged up 0.2% in December ​from November, the seventh consecutive month of increase, Rating and Valuation Department data showed, following an upwardly ​revised 1.1% increase in November.

WHY IT'S IMPORTANT

Home prices in Hong Kong, one of the world's least affordable cities, have tumbled nearly 30% from a 2021 peak. The decline was driven 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 authorities tried to prop ​up the sector - a core pillar of the economy - since 2024, removing curbs on property purchases and relaxing ‌ratios on down payments.

HERE'S SOME CONTEXT

Property developers have resorted to selling new flats at discounted prices to boost sales, suppressing the ​second-hand market, which is reflected in the official ⁠price.

Major Hong Kong banks lowered interest rates in October, the fifth cut since September 2024, following easing by the U.S. Federal ‌Reserve.

Hong Kong's monetary policy moves in lockstep with the U.S. as the city's currency is pegged to the greenback.

WHAT'S NEXT?

Analysts suggest Hong Kong's housing market is bottoming out, with steady transaction ‌volumes providing support. They said price movements this year will depend on the pace of ‌rate cuts, the severity of Sino-U.S. trade tensions and the performance of the stock market.

CBRE Hong Kong Executive Director Eddie Kwok expects a 3-5% rise in home prices in 2026, citing ‍a stock market rally last year that created a wealth effect and encouraged more buyers. He highlighted strong developer interest in ⁠a land tender this month as a sign of market optimism.

Morgan Stanley analyst Praveen Choudhary forecasts a 10% rise in 2026 backed by increased investment demand and strong rental trends, supported by a steady influx of talent and students from mainland China.

(Reporting by Clare Jim; Editing by Jacqueline Wong)

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