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Hong Kong’s rental costs hit another record last month, driving home prices up, as demand from expatriates and mainland talents remained strong.
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Hong Kong residential rents increased by 6.2 percent from 12 months ago and have been up by 5.8 percent in the first nine months of the year. The rental index climbed by 0.47 percent to yet another fresh high in the month, official data showed on Wednesday.
Hong Kong private home prices also rose 0.19 percent in their second consecutive monthly rise last month, up 9.3 percent from a year earlier, according to the latest data from the Rating and Valuation Department, bringing overall price growth to 7.1 percent for the first nine months of the year.
Shift from rent to buy
"Beyond high-calibre professionals and top-tier talent, senior executives from foreign-invested enterprises are also renting homes in Hong Kong, as they remain optimistic about the city’s economic environment," Derek Chan Hoi-chiu said, head of research at Ricacorp Properties.
Chan notes that as rents continue to rise without a corresponding surge in property prices, the financial rationale for buying over renting becomes increasingly compelling.
He pointed out that gross rental yields average around 3.5 percent for small units and exceed 2.6 percent for other flat types, compared with an effective mortgage rate cap of 3.25 percent across most major Hong Kong banks.
Primary sales momentum
In the first 27 days of October, new-home sales reached 1,700 units, marking the third consecutive month that sales have exceeded the 1,000-unit threshold.
The total for the full month is expected to approach 2,000 units, with this momentum likely to persist through November, according to Hong Kong Property Services research department’s data
Steady Q4 growth forecast
Looking toward the final quarter, Chan forecasts a further 1.3 percent rise in rents, which would bring the total rental growth for the year to over 7 percent.
Regarding home values, Chan anticipates a modest, fluctuating increase of approximately 1.5 percent in the fourth quarter, resulting in an overall annual gain of between 8 percent and nearly 10 percent—a pace that would represent the largest year-on-year increase in nearly nine years.
Ricky Wong Kwong-yiu, vice chairman and managing director of Wheelock Properties, said market demand remains resilient. Supported by both end-user and investment demand, the property market is gradually stabilising, and he expects property prices to maintain a steady trend moving forward.
Colliers maintains its full-year home-price forecast, projecting an increase of 8 percent to 10 percent for 2026, followed by an additional gain of 3 percent to 6 percent in 2027.
