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Hong Kong's private home prices continued their upward trend in May, rising 1.4% from the previous month to record a twelfth consecutive monthly increase. The steady growth was supported by positive market sentiment, improved stock market performance, stronger demand from mainland Chinese buyers and professionals, and easing housing oversupply. Property prices have now gained 7.4% so far this year, reaching their highest level since October 2023. However, market experts believe the momentum could slow in the second half of the year due to a weaker stock market, possible interest rate hikes and tighter regulations on outbound investment from mainland China.
Private home prices in Hong Kong rose 1.4% in May compared with the previous month, marking the twelfth consecutive monthly increase, according to data released by the city's Rating and Valuation Department. The latest growth follows a revised 1.1% increase recorded in April.
With the latest rise, home prices have climbed 7.4% during the first five months of the year, reaching their highest level since October 2023. The sustained recovery reflects improving confidence in the residential property market after several years of declining values.
The market has been supported by positive investor sentiment, a strong stock market for much of the year, easing housing oversupply and growing demand from mainland Chinese buyers. Demand has also been driven by an increasing number of mainland Chinese professionals relocating to Hong Kong, helping improve activity in the residential sector.
Despite the recent gains, property consultants believe the market could face challenges in the second half of the year. Some real estate agencies have cautioned that residential prices may come under pressure if the Hong Kong stock market loses momentum and interest rates increase.
Eddie Kwok, Executive Director at CBRE Hong Kong, said the combined impact of a stock market correction and tighter Chinese regulations on outbound investment is expected to reduce buying demand. He added that these factors could lead to lower transaction volumes in the coming months.
Hong Kong's residential property market showed signs of recovery last year, when home prices increased 3.6%, marking the first annual gain since prices peaked in 2021. Before the recovery began, the market had undergone a prolonged correction, with residential prices falling by nearly 30% from their peak as higher interest rates, weaker economic conditions and lower buyer confidence weighed on demand.
Source Reuters
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