Analysts expect home prices in both primary, secondary markets to continue increasing this year as the city’s real estate recovers.
Hong Kong’s lived-in home prices rose for the 11th consecutive month to a 30-month high in April, even as the rate of growth slowed compared with March, while rents in the city rose to another record high.
Analysts said home prices in both primary and secondary markets would continue to improve this year and next, amid growing buyer confidence.
According to the Rating and Valuation Department’s data, the private lived-in home price index in the city rose to 316.6 in April, representing a 0.89 per cent rise month on month. The growth was smaller than the 1.4 per cent jump in March. Lived-in home prices have increased 10.51 per cent year on year.
Rents rose 0.59 per cent to an index of 203.4. They grew 4.9 per cent year on year.
“Strong momentum in the primary market is driving a wider recovery across the sector,” said Eddie Kwok, executive director of CBRE, a valuation and advisory firm located in Hong Kong.
“Secondary home prices are also increasing as growing buyer confidence spreads across the residential market,” Kwok said.
In mid-sized flats, the price growth momentum was stronger. Prices for units sized between 753.5 sq ft (70 square metres) and 1,075.3 sq ft rose 10.36 per cent. Larger homes, sized 1,076 sq ft (100 square metres) and above climbed more gently, up only around 0.25 per cent.
The first-hand residential market is exhibiting robust absorption rates. Sustained demand has shifted pricing power back to developers, as seen in recent price increases in new project launches, according to Kwok.In the latest example, Sun Hung Kai Properties sold out all 87 units on offer at the Lime Spark project in Tsuen Wan in the New Territories on Saturday, with one buyer spending more than HK$40 million (US$5.1 million) to purchase six two‑bedroom units, according to both Midland Realty and Centaline Property.
A line of potential flat buyers at the International Commerce Centre in Kowloon on May 9 as Sun Hung Kai Properties launches 154 units at its Lime Spark project in Tsuen Wan. Photo: Eugene Lee
A steady inflow of capital continues to support the market. This ample liquidity was boosting overall economic activity and helping to fuel the current wave of optimism in the real estate sector, Kwok said in response to the government’s home price index rise.
“Supported by a combination of stable demand, improving sentiment and ample liquidity, we expect overall residential property prices to record an increase of around 8 to 10 per cent for the full year, with a steady and positive growth trend,” Kwok said.
The recovery in Hong Kong’s residential market triggered Morgan Stanley to upgrade its home price increase forecast this year from 10 to 12 per cent. The US investment bank also predicted another 5 per cent jump in Hong Kong home prices next year.
At the end of April, home prices had increased around 13 per cent from the end of 2024, though they are still 19 per cent below their peak in August 2021, according to Morgan Stanley.
Though sentiment is largely optimistic about the Hong Kong real estate market, one analyst said they would expect growth to slow later this year due to interest rate hikes.
“Overall, the housing market outlook remains positive,” said Norry Lee, a senior director at JLL, a global real estate and investment management firm.
“However, as interest rates may rise, a faster increase in rates may slow price growth in the second half of the year, with gains likely lower than in the first half. At the same time, supported by talent admission schemes, residential rents are expected to continue rising and reach record highs,” Lee said.
Source: SCMP
