Hong Kong’s asking rents for private residences have risen for six consecutive months, soaring to a new high in July that surpassed previous records in 2019, according to a Midland Realty report released on Tuesday.

Meanwhile, property prices are also projected to rise for the full year, marking the first time in four years that both rents and prices have increased simultaneously.

Midland Realty, the city’s listed property services brokerage firm, announced that Hong Kong’s average rent per square foot for private residential properties is about HK$38.55 ($4.91) in July, with a monthly growth of 0.65 percent. The number is also about 0.57 percent higher than the previous record of HK$38.33 in July 2019, the report says.

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The talent inflow from the Chinese mainland through various projects contributed to this trend because these professionals tend to rent first, said Buggle Lau Ka-fai, Midland Realty chief analyst.

Lau said another reason is that Hong Kong’s interest rates in the past two years have been high, which made mortgage loans more expensive, so the high-interest-rate environment led many potential homebuyers to rent a house and take a wait-and-see attitude towards buying it.

In addition, Hong Kong’s funds have begun to flow out of time deposits in recent months, while the city’s total amount of deposits continues to increase, indicating some investors are reallocating funds to alternative sectors, the report said.

In June, Hong Kong’s time deposit figures recorded HK$10.13 trillion, down 3.6 percent from the HK$10.51 trillion in April, according to the latest data from Hong Kong Monetary Authority (HKMA).

Assuming that 1 percent of the HK$10 trillion time deposit flows into the property market, it is equivalent to a transaction volume of 100 billion yuan ($13.9 billion). If the property price is 10 million yuan per unit, it is equivalent to about 10,000 units of demand, Midland Holdings (Residential) CEO Dave Ma Tai-yeung said.

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Given that the chances of the US interest rate cuts are increasing this year, and Hong Kong interest rates are likely to follow suit, it is believed that this will attract more funds into the property market, Ma said.

Looking ahead, if the current capital flow remains unchanged and the local interest rates become lower, it is believed that rents and property prices will continue to rise in the third quarter of this year, Ma said.

He said it is estimated that the prices of private residential property will rise by 2 percent in the third quarter, returning to the midterm level of last year. As for rents, it is estimated that they will continue to rise by about 3 percent for the third quarter.

Contact the writer at thor_wu@chinadailyhk.com