Knight Frank: Hong Kong's second-hand property prices are not expected to rebound significantly in the short term, and Hong Kong banks are expected to cut interest rates again this year
According to Wang Zhaoqi, Senior Director of Knight Frank, due to the impact of U.S. tariffs, global economic uncertainty has increased, and the Federal Reserve may cut interest rates by 0.25% again in October. It is expected that Hong Kong property prices will begin to improve in the coming months, rising by 2 to 3% for the whole of 2025, with a significant rebound expected in the first half of 2026, rising by 5% for the entire year. In the short term, Hong Kong's secondary property prices have not shown a significant rebound, and market purchasing power tends to favor new developments. It is anticipated that the transaction volume for both new and second-hand properties this year will reach between 60,000 and 62,000. Rental demand remains rigid, and it is expected that rents will rise by another 4 to 5% this year
According to the Zhitong Finance APP, Wang Zhaoqi, Senior Director and Head of Research and Consulting for Greater China at Knight Frank, stated that U.S. tariffs continue to bring uncertainty to the global economy. The Federal Reserve is likely to cut interest rates by 0.25% again in October to stimulate the economy. He predicts that Hong Kong property prices will begin to improve in the coming months, but may rise by 2 to 3% for the entire year of 2025. A significant recovery is expected in the first half of 2026, with property prices potentially increasing by 5% for the entire year. Wang Zhaoqi anticipates that Hong Kong banks will further lower the prime rate (P) by 0.25% within the year, bringing interest rates down to nearly 3%, below rental yields, which is expected to attract more investors into the market.
Wang Zhaoqi pointed out that market sentiment has clearly improved, but due to the high inventory levels, the Hong Kong Interbank Offered Rate (Hibor) has not been able to maintain low levels to significantly drive down interest rates. Market purchasing power continues to favor new developments, while developers have not shown aggressive pricing, leading to a lack of significant recovery in Hong Kong's secondary property prices in the short term.
Wang Zhaoqi expects that the sales performance of new developments will be better than that of the secondary market, but inventory levels remain high. He predicts that it will take a reduction of 12,000 to 13,000 units before property prices can rebound. At the current sales pace, this is expected to return to a healthier level by the first half of 2026. In the short term, monthly transactions will hover around 5,000, with total transaction volumes for both new and secondary markets expected to rise to 60,000 to 62,000 this year. Developers are actively reducing inventory, and due to the accumulation of stock, it is believed that they will offer more discounts and financial plans to attract buyers when launching new projects.
Additionally, various talent programs from the Hong Kong government have led to a slight increase in the labor population and high-income individuals, providing rigid support for residential rental demand. The rental trend is expected to remain stable in the coming months, with an anticipated increase of 4 to 5% this year, reaching a historical high. It is expected that the rental trend will continue to rise steadily in 2026, increasing by another 3 to 5%
