Knight Frank: It is expected that Hong Kong property prices will increase by about 5% next year, while rental growth will slow to 3%.

Rosanna Tang, Executive Director and Head of Research at Knight Frank, stated that it is expected that the residential transaction volume in Hong Kong next year will be similar to this year, with prices rising by around 5%. Rental prices have already increased significantly this year, and there will likely be some growth in rental prices in 2026, possibly slightly slower than this year, at around 3%. As for hotel conversions into student dormitories, the renovation of hotel properties may take time, and not all properties will be released onto the market at once. Tang pointed out that thanks to the continuous increase in transaction volume, property prices in Hong Kong have gradually stabilized since March this year, with a slight increase recorded from April. According to data from the Rating and Valuation Department of Hong Kong, the overall residential property price index recorded a 3.3% increase from March to October, resulting in a 1.8% increase from the beginning of the year, indicating that the property market has bottomed out and is gradually recovering from its consolidation period. On the other hand, the residential rental index continued to rise due to the demand for housing from foreign professionals and non-local students, recording a 4% increase from the beginning of the year. Despite the interest rate cuts, investors continue to be attracted to the market, with some tenants considering purchasing property instead, supporting both transaction volume and prices. She mentioned that as Hong Kong banks follow the Fed in lowering interest rates, the entry threshold and interest costs for the property market have decreased, coupled with the positive wealth effect from the stock market, further releasing the demand for housing, leading to a continued positive sentiment in buying and selling. Since March this year, residential sales contracts have exceeded 5,000 for nine consecutive months, with an estimated 16,400 transactions in the fourth quarter, a 9% increase year-on-year. The total annual transaction volume is estimated to be around 62,000, a 17% increase. Developers have actively released inventory this year, with new home sales accounting for approximately 33% of the total residential transactions from January to October. Lai Kim Ming, Senior Director of Valuation and Advisory Services at Knight Frank Hong Kong, stated that there will be a slight increase in luxury property transactions in the near future, which will likely drive the medium and small-sized markets next year. The turnover in high-end properties is expected to start next year, but it will be slow. If the financial market is good next year, luxury properties will likely be the first to come to market.