After enduring a persistent four-year slump, Hong Kong’s residential property market finally found its footing in 2025, recording its first annual price gain since 2021. This significant turning point saw the private domestic home price index rise by 3.25% over the year, effectively ending a discouraging four-year decline. Government data confirmed that prices for lived-in homes mirrored this increase, while second-hand home prices managed to climb 0.23% in December alone, marking a seventh consecutive monthly gain that signaled a renewed sense of stability.
Looking closer at the numbers, the momentum built steadily throughout the year, suggesting the recovery was not just a fleeting moment. The house price index moved from 189.45 in the first quarter to 189.89 in the second, eventually reaching 192.15 by the third quarter. While this recovery still sits below the peak index of 263.65 seen in late 2021, it represents a substantial improvement over the historical average of 130.12 recorded between 1993 and 2025. To further contextualize the market’s long-term evolution, current values remain well above the minimum recorded of 39.3 index points registered in the third quarter of 2003.
Notably, not every sector participated equally in this rally; for instance, while the general residential price index rose, larger luxury apartments over 160 square meters actually saw values dip by 21.5% year-on-year in October. This contrasts with broader trends where luxury segment purchases remained resilient despite economic uncertainty, as seen in other markets.
Several key drivers fueled this resurgence, creating a perfect storm for recovery. Mainland Chinese buyers were particularly active, spending a record HK$138 billion on residential property and accounting for one-fifth of all transactions.
Additionally, the market benefited from falling mortgage rates as the HKMA aligned with US Fed cuts, while a rebounding stock market created a helpful wealth effect. A surge in rental prices, which hit record highs after rising 4.26% annually, also improved yields and attracted investors back to the table.
These factors, combined with the government’s decision to fully remove property cooling measures and ease stamp duties, helped the market achieve a soft landing. Market indicators further reinforced this stabilization as unsold inventories declined in the second half of 2025. With real prices stabilizing after a 28% drop from peak levels, analysts believe the sector has finally exited the long tunnel of downturns, firmly setting the stage for projected growth of around 5% to 8% in 2026.
