Hong Kong property market ends long-term decline: volume and price both rise by 2025, with prices and rents rebounding

1、 Ending Long term Decline: Price Index Shows First Annual Increase After 43 Months of Continuous Decline

From September 2021 to March 2025, the price index of private residential properties in Hong Kong experienced the longest period of decline in history, with a cumulative decline of nearly 30%. Until reaching a temporary bottom in March 2025, the market began to stabilize and rebound, achieving consecutive month on month increases. The 3.3% increase for the whole year, although not radical, is of great significance. It is not only the first annual increase since 2021, but also marks the official end of the downward cycle of the real estate market that lasted for more than three years.

From the perspective of market structure, the recovery shows significant differentiation. Small and medium-sized residential buildings (below 100 square meters) have stronger support for basic needs, with an annual increase of 3.41%, outperforming large units at 1.42%. As of December 2025, the price index was reported at 298.6 points, which is still about 25% lower than the historical high in 2021, but has reached a new high in a year and a half, and market confidence is steadily recovering.

2、 Leasing leads the way: rental index hits a historic high, with an increase exceeding the selling price

Compared to the selling price, the rental market in Hong Kong will perform even better in 2025. The annual rental index rose by 4.3%, not only climbing for the third consecutive year, but also reaching 200.7 points in December, breaking through the 2019 high and setting a new historical high.

This round of rent increase is strongly driven by rigid demand. On the one hand, talent programs such as "Gaocai Tong" in Hong Kong continue to make efforts, attracting about 260000 talents and their families to Hong Kong by the end of 2025, resulting in a significant increase in rental demand. On the other hand, in the early stages of the real estate recovery, some buyers held onto their money and chose to rent as a transitional option, further boosting the popularity of the rental market. The sustained popularity of the rental market not only provides strong support for the overall recovery of the real estate market, but also significantly increases the rental return rate. The return rate of some small-sized apartments exceeds 3.6%, which is higher than the mortgage interest rate, forming a positive incentive of "renting to support loans" and activating the demand for home purchases in the opposite direction.

3、 The resonance of the four major engines drives the comprehensive recovery of the real estate market

The recent bottoming out and rebound of the Hong Kong property market is not the result of a single factor, but rather the joint efforts of the four core engines of policy, interest rates, population, and capital.

Policy relaxation is the key trigger. In 2024, Hong Kong will completely abolish the "hot tricks" such as additional stamp duty and buyer stamp duty, significantly reducing transaction costs. Property with a value of tens of millions of Hong Kong dollars can save over one million in taxes and fees, directly activating market liquidity. In 2025, the SAR government will further increase the upper limit of the fixed stamp duty of HKD 100 from HKD 3 million to HKD 4 million, continuously lowering the entry threshold.

The decline in interest rates has reduced the cost of buying a house. In 2025, the Federal Reserve began a cycle of interest rate cuts, causing the HIBOR interest rate in Hong Kong to fall significantly from its high at the beginning of the year. The mainstream mortgage interest rate fell below 3%, significantly reducing the pressure on monthly payments and effectively enhancing purchasing power and market confidence.

The population inflow and wealth effect provide support from both the supply and demand sides. The new population brought by the talent plan has created a solid housing demand. At the same time, the Hang Seng Index will soar by 28% in 2025, and the wealth effect brought by the stock market will spill over to the real estate market, promoting the concentrated release of demand for improvement and investment.