The Hong Kong Property Market Moving Into the Next 6 Months. December 18th, 2025.

Some Context, UBS Global Real Estate Bubble Index 2025:

One of our favourite indicators is the UBS Global Real Estate Bubble Index, which has been a relatively good indicator of the "priciness" of global property markets. In this respect, we have seen Hong Kong go from a region consistently topping the index charts, such as at its height in 2018 with an index of 2.03, to now having a value of 0.44 in 2025.

UBS 2025 data:

UBS 2018 data:

Hong Kong Property Market Outlook: Next 6 Months (December 2025 - June 2026)

Based on current market conditions, the Hong Kong property market is at a critical inflection point. Here's what we can expect over the next six months:

Market Has Turned the Corner

After a six-year correction that began in late 2019, Hong Kong's property market has turned the corner, with office leasing and housing markets leading the recovery in the fourth quarter of 2025.[10] The overall residential price index has picked up by approximately 3.3% between March and October, bringing year-to-date home prices to a bottom-out point and to then move upwards by 1.8%.[3]

Price Projections for H1 2026

The outlook is cautiously optimistic with mild price growth expected:

• Home prices are anticipated to pick up further by up to 5%[3] over the next year

• Prices of mass residential are expected to rise about 5% in 2026[10]

• Some analysts predict a mild recovery of 0% to 5%[2] for residential prices overall

However, it's crucial to note there are conflicting forecasts - JLL maintains a more bearish view, with earlier 2025 projections suggesting continued declines, though this appears to have softened with recent data.

Key Drivers Supporting Recovery

Interest Rate Environment: The sustained low-interest environment is critical. Supported by a sustained low-interest-rate environment and wealth effects from a buoyant stock market, monthly residential transactions have exceeded 5,000 units for nine consecutive months, helping overall home prices to stabilise and show upward momentum.[3]

Transaction Volume: The full-year 2025 residential transaction number is now expected to rise in the range of 9% to 13% from the 2024 level to reach 58,000 to 60,000 units[8], indicating improving market sentiment.

Rental Market Strength: The residential rental index continued to trend up, driven by ongoing demand from incoming expats and non-local students, rising 4.0% year-to-date.[3] This provides support through investor demand for rental yields.

Significant Headwinds to Watch

Inventory Overhang: This remains the most serious challenge. As of earlier in 2025, developers were sitting on a pipeline of approximately 93,000 unsold units, and at current absorption rates, it would take nearly 57 months to clear[2] - well above historical averages.

Negative Equity Crisis: The city had 40,741 residential mortgage loans in negative equity at the end of March, up 6.1 per cent from 38,389 at the end of 2024[7], the highest in over 20 years. This creates psychological barriers to purchasing.

Geopolitical Uncertainties: Trade tensions and US policy uncertainties continue to weigh on sentiment, potentially dampening the recovery momentum.

Shift in Economic Circumstance: We expect some form of shift in the financial sphere of Hong Kong with further integration with China, potentially leading to recovery in the overall financial market, and by relation the commercial real-estate market.

Market Segmentation: Winners and Losers

Newer Properties (Under 20 Years): Expected to experience recovery or price stabilisation [2]

Older Properties (40+ Years):Likely to lag behind[2]

Luxury Segment: Previously showing weakness, but luxury residential prices are expected to revert to normal after the market digested significant distressed sales in 2024[2]

Bottom Line for Next 6 Months

The market has bottomed and entered the early recovery phase, but this will be gradual and uneven. I expect:

1. Modest price appreciation of 2-3% over the next six months (Dec 2025 - June 2026)

2. Continued transaction volume growth as buyers sense the bottom is in

3. District divergence - premium areas (Central, Mid-Levels) outperforming outer districts

4. Developer pressure continues with promotional pricing to clear inventory

5. Rental market strength continues to support investor interest

The recovery is real but fragile. Any external shocks (renewed US-China tensions, unexpected Fed policy changes, or regional economic slowdown) could easily derail the nascent recovery. The high inventory levels mean developers will keep prices competitive, limiting upside potential. This is a "recovery" in the sense of stabilisation rather than a return to 2019-2021 exuberance.

This is meant to be used to inform your decisions, but should not be considered financial advice.