Hong Kong’s residential property market is bottoming out, and is expected to rebound over 10 percent this year, driven by a host of favorable market factors, real estate analysts, fund managers and credit analysts said.

As Hong Kong's housing market continues to recover, developers have shifted from aggressive discounting strategies toward more assertive pricing.

According to real estate advisory firm Jones Lang LaSalle, the average prices in the first price lists of new development projects have rebounded by approximately 15 percent from the low levels recorded over the past four years, with initial price lists and subsequent adjustments having seen increases of up to 30 percent for selected units in highly sought-after projects.

The pricing of new projects in the Kai Tak development area has seen the strongest recovery. New residential projects launched in the district in 2023 and 2024 were typically priced at HK$16,000 ($2,041) to HK$20,000 per square feet on initial price lists. This year, the average prices of the new launches in the area have risen to above HK$23,000 per sq ft for higher-quality units.

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“Responding to evolving market conditions, developers have recalibrated their pricing strategies, moving away from the cautious approach seen previously. Developers are no longer relying on discounted pricing to drive sales, with some units in popular projects recording double-digit price increases, reflecting strengthened market confidence,” said Norry Lee, projects strategy and consultancy senior director at JLL.

But Lee warned that as interest rates may rise in the second half of this year, the pace of new home price growth is expected to moderate, maintaining a steady upward trend.

The price index of private domestic units, as tracked by the Rating and Valuation Department, soared to 316.6 in April, edging up 10.5 percent year-on-year and 0.9 percent month-on-month. Home prices also surged 5.6 percent from January to April this year.

There were 7,138 cases of residential building unit sales and purchase agreements recorded in May, an almost 40 percent jump from a year ago, with a consideration of HK$65.5 billion, a year-on-year surge of 70.6 percent, Land Registry data shows.

United States-based S&P Global Ratings forecasts that home price appreciation in Hong Kong will be up to 10 percent in 2026, and the growth rate will rise to 3 percent in 2027.

"We predict a phase of moderate recovery in Hong Kong's housing market over the next two years," said S&P Global Ratings credit analyst Edward Chan. "Hong Kong's traditional supply-demand imbalances likely will not be as pronounced as they have often been in the past. Supply of new private homes over the next three to four years remains adequate, and subsidized housing supply is also on the rise."

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Patrick Wong, real estate senior industry analyst at Bloomberg Intelligence, predicts that Hong Kong’s secondary-home prices are set to rise 19 percent in 2026 and 2027. “The stronger outlook is mainly driven by the renminbi’s rise against the Hong Kong dollar, rising rents and lower mortgage costs. The stronger renminbi boosts mainland buyers’ purchasing power, supporting new-home sales for major developers.”

US investment bank Morgan Stanley has raised Hong Kong residential home price growth estimate to 12 percent for 2026 and has said it expects another 5 percent hike next year, driven by strong sell-though, declining inventory levels, falling land supply, and capital and talent inflows from the Chinese mainland and the Middle East.

According to US-based credit rating agency Moody’s Ratings, lower interest rates and a relaxation in Hong Kong’s mortgage rules since October 2024 have supported housing demand. Home prices have been further helped by reduced transaction costs, including the introduction of a higher stamp duty concession threshold in the 2025-2026 government budget.

Moreover, the potential homebuyer pool from mainland talent has expanded, with many recent arrivals transitioning to ownership from renting because rents have increased over the past three years, the credit rating agency added.