Does Hong Kong’s housing market rebound need local owners to sustain it?

Hong Kong’s housing market has rebounded faster than expected this year, but analysts say the pace of the recovery could undermine its own momentum as rising prices begin to erase the affordability that had started drawing local buyers back into the market. Jeremy Wong, a financial professional in his 40s who recently married, had hoped this year would finally be the right time to buy a three-bedroom home with his wife after prices corrected from their peak. Instead, the rebound had pushed their plans back by two to three years, he said, as they saved for a larger down payment rather than rely on their parents’ retirement savings. “It shocked me,” Wong said. “I knew prices generally follow the stock market, but I didn’t expect them to rise so quickly ... the price now is too high to find a place.” The recovery has been powered not only by local buyers returning after years of falling prices, but also by new sources of demand, including a surge in student rental demand and mainland buyers or investors returning to the market. Together, those buyers with stronger purchasing power have pushed prices higher much faster than many prospective homeowners expected. Buyers purchasing multiple units completed 563 transactions worth HK$14.5 billion (US$1.84 billion) during the first five months of the year, more than double the level recorded a year earlier, according to Centaline Property. The renewed demand has revived the market, allowing landlords to increase prices, but analysts say the speed of the rebound could make it harder to draw more local owner-occupiers into the recovery. Shih Wing-ching, founder of Centaline Property Agency, said the speed of the rebound had caught many prospective buyers off guard. “In less than a year, prices have risen rapidly,” Shih said. “People who had finally found homes within their budget suddenly discovered they could no longer afford them.” Developers are already capitalising on the momentum by setting aggressive prices for new projects, which currently carry premiums of 3 to 5 per cent, compared to previous levels. Shih warned that developers must exercise restraint in their pricing and sales strategies. While mainland buyers have amplified the recovery, “they cannot support the whole market. You still need local end-users,” he said. The shift has been particularly visible in smaller flats, which were traditionally viewed as entry-level homes for first-time buyers but are increasingly seen as rental assets. Rating and Valuation Department data showed 68.4 per cent of newly completed smaller flats were rented rather than owner-occupied in 2025, the highest share since 1997. Sunny Leung, co-founder of local think tank Liber Research Community, said removing all residential cooling measures effectively encouraged investment demand by putting local and non-local buyers on the same footing again. “It benefits no one except investors and those who already own multiple properties for buy-to-let,” he said. That disconnection became obvious to Wong, he said, after touring new developments in To Kwa Wan and Hung Hom. Rather than discussing whether the flats suited young families, sales agents discussed rental yields, the potential to rent to university students and investment returns. “Even the real estate agents are using an investment lens for a livability problem,” Wong said. “Where are all of us going to live? There’s no place for us.” Hong Kong’s affordability challenge remains among the world’s most severe. The city has ranked as the world’s least affordable housing market for years, according to Demographia’s annual survey. Consultancy JLL said the private housing price-to-income ratio rose to 13.55 years in May from 13.08 years at the end of 2025, after falling to a 12-year low in late 2024 following years of declining home prices. “Recent price hikes are starting to test buyers again ... the correction [before] improved affordability, but the recovery is slowly eating into those gains,” said Norry Lee, a senior director at JLL. Yet Shih and other analysts believed prices would continue climbing gradually over the next several years. “Unlike previous rebounds, both prices and transaction volumes have risen together,” he said. “Hong Kong has entered a genuine upwards cycle rather than another temporary rally.” Still, younger buyers like Wong do not share the market’s optimism. Emily Chan, who had hoped to move out of her parents’ home, said prices remained “quite steep” and that she believed there was “a strong possibility” of another correction before she bought. Cheng Ching-ching, 26, who has been house hunting since early this year, said she found newer flats near MTR stations too expensive, while older homes were nearing mandatory inspections that often result in expensive renovation and maintenance works for owners. This divergence in expectations could become the market’s next test. Shih expected a slower pace in the third quarter as buyers would become more resistant to higher prices. JPMorgan forecasted second-half home price gains as less than 5 per cent, while Citi expected transaction volumes to soften as stock-market volatility and policy uncertainty encourage buyers to wait. “If prices continue climbing rapidly, the government could eventually consider bringing some curbs back,” said Edgar Lai, senior director of valuation at Cushman & Wakefield Hong Kong. For Wong, the issue is no longer just about the housing market. The delayed purchase has also pushed back the couple’s plans to start a family. “We are sacrificing our timeline for children,” he said.

Does Hong Kong’s housing market rebound need local owners to sustain it?

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Home prices in the city have risen 10 per cent this year, but analysts warn investor-driven recovery may need local buyers to sustain it

Home prices in the city have risen 10 per cent this year, but analysts warn investor-driven recovery may need local buyers to sustain it