Hong Kong Property Prices Forecast to Climb 15% as Buyers Return

Recovery Gains Momentum

Hong Kong's residential property market is on track to post 15 per cent price growth by year-end, according to Midland Realty, as transaction volumes rebound and developers prepare to bring fresh inventory to buyers who have returned after months of caution.

The city holds the title of the world's most expensive residential market in 2026, according to Deutsche Bank data. That distinction has not dimmed buyer appetite. First-hand residential transactions jumped to 1,100 units in August, up from just over 800 units in both June and July, figures from Midland Realty show.

Dave Ma Tai-yeung, chief executive of Midland (Residential), told a press conference on Thursday that improved sentiment is prompting developers to accelerate project launches. He expects first-hand transactions to climb 50 per cent quarter-on-quarter to 5,100 units in the final three months of the year, while secondary market deals should rise 10 per cent to 12,700 units.

Second-hand transactions have also begun to stabilise after a prolonged lull, the firm's data indicate. Ma noted that residential rents have been hitting successive highs, creating scope for capital values to catch up.

Rate Environment Supports Sentiment

A key factor underpinning the optimism is the expectation that Hong Kong banks will not automatically mirror any interest rate increase by the US Federal Reserve this year, Midland Realty executives said.

Eric Tso Tak-ming, chief vice-president at mReferral Mortgage Brokerage Services, explained that while Hong Kong's base rate has tracked the Federal Reserve since 1983 under the Linked Exchange Rate System, commercial banks retain discretion over when and by how much they adjust prime and savings rates. Tso said lenders are likely to raise prime lending rates only modestly, if at all, in response to any US move.

That divergence matters in a market where affordability is already stretched. Keeping mortgage costs in check removes one of the main brakes on transaction activity.

Developers Compete for Buyers

Benny Sham, a research analyst at Midland Research Centre, said developers continue to price new launches competitively to draw buyers away from the secondary market. Past cycles suggest that strong primary sales can lift the entire market, supporting both transaction volumes and prices in the resale segment.

More than 80 first-hand residential transactions exceeding HKD 100 million (USD 12.8 million) have been recorded so far this year, already surpassing the full-year total for 2025 in just over eight months, Sham said. That pace reflects a market that has absorbed February's stamp duty increase on super-luxury homes.

With Chief Executive John Lee Ka-chiu scheduled to deliver the annual policy address next week, market participants are speculating that the government may lower the stamp duty threshold for high-end properties. Sham said demand for super-luxury homes remains robust despite the February budget adjustment, and any relief could further energise the top end of the market.

Outlook Hinges on Policy and Inventory

The trajectory for the rest of the year depends on two variables: the volume of new supply that developers bring to market and any fiscal measures the government announces. Both appear likely to support further gains.

Developers have held back inventory during periods of uncertainty, but improved sentiment is prompting them to move. At the same time, the government faces pressure to support the property sector without reigniting affordability concerns that have long plagued Hong Kong residents.

The 15 per cent annual gain projected by Midland Realty would mark a sharp turnaround from the subdued conditions that characterised much of the first half of the year. Whether that forecast proves conservative or ambitious will become clear as the final quarter unfolds and buyers respond to the combination of new supply, stable financing costs, and any policy adjustments the administration unveils.