Jones Lang LaSalle: Hong Kong property market is positively correlated with the Hang Seng Index, with property prices lagging the stock market by 2.2 months.

Jones Lang LaSalle (JLL) released the "Hong Kong Residential Sales Market Overview" on January 28, which mentioned that over the past 5 years, the Hang Seng Index has led the residential capital values by an average of around 2.2 months, indicating a significant correlation between the Hang Seng Index and residential capital values. This lag is mainly due to the low liquidity in the property market and the longer time required for transaction registration procedures. Market data shows that since June 2020, the Hang Seng Index and residential capital values have been moving in sync. However, since July 2024, there has been a divergence in the trends between the two: the Hang Seng Index continues to rebound, while residential capital values, although not rising in sync, have seen a significant narrowing of the decline, and a slight recovery has been recorded since August 2025. This phenomenon indicates that despite differences in the volatility of the stock market and property prices, they still maintain fundamental consistency in direction. Li Yuanfeng, Senior Director of Project Strategy and Advisory Department at Jones Lang LaSalle (JLL), stated that with the strong performance of the stock market, the Hong Kong residential market is expected to receive support in the near term. It is widely expected that there will be further interest rate cuts this year, which is expected to boost investment confidence. However, historical trends show that property prices typically lag behind the stock market, reflecting a slower adjustment speed. Despite gradual improvement in market sentiment, high inventory levels and ongoing macroeconomic uncertainty will continue to slow down the pace of recovery, and the bank holds a cautious optimistic view on the market outlook. Jones Lang LaSalle (JLL) stated that the Hang Seng Index rebounded by 27.8% from the beginning of the year to the end of the year last year. The average daily turnover of the Hong Kong Stock Exchange (00388) reached HK$249.8 billion in 2025, a year-on-year increase of about 90%, and the second-hand residential market in Hong Kong also picked up momentum. In 2025, the transaction volume reached 42,300, an increase of 16.9% year-on-year; the total transaction amount reached HK$299 billion, an increase of 14.4% year-on-year. Zhong Churu, Senior Director of Research Department at Jones Lang LaSalle (JLL), pointed out that historical trends over the past decade show a sustained positive correlation between the annual average value of daily turnover in the stock market and the number of second-hand residential transactions within the local market. Data shows that the activity in the stock market is highly coordinated with the scale of residential transactions. The synchronous trend is primarily driven by the "wealth effect." She explained that when the value of stocks appreciates, investors perceive an increase in net assets, their financial confidence improves, and they tend to diversify their asset allocation. The capital gains from stock investments often liquidity and flow into tangible assets, particularly residential property, which is seen as a preferred stable investment in Hong Kong. In summary, although there is no direct causal relationship between the stock market and the residential market, historical data shows a high degree of linkage between the two, reflecting overall macroeconomic sentiment.