Hong Kong Real Estate Market Outlook 2025

In 2025, purchasing property in Hong Kong is expected to be more attractive than renting, driven by anticipated interest rate reductions and relaxed property restrictions. Both price growth and increased transaction volumes are likely, supported by strong local demand and continued interest from mainland Chinese buyers. However, challenges remain in the office rental sector, and retail sales are projected to soften.

Primary vs. Secondary Sales: Performance Outlook

Market Volume:
CBRE projects around 60,000 residential transactions in 2025—a 10% increase year-on-year. Primary (new development) sales are set to account for about one-third of these, with secondary (existing home) sales making up the rest.

Primary Sales:
After a period of record-low activity (10,000 units in 2022-2023), primary sales rebounded to 17,000 in 2024, in line with the 2017-2021 average.

• A further 10% growth is anticipated in 2025, with sales potentially reaching 18,000-20,000 units if interest rates decline as expected.
• Developers, particularly those with weaker financial positions, may focus on boosting sales volume, which could temporarily pressure prices. However, as price reductions ease, price stabilization should follow.
• New projects will likely emphasize smaller, more affordable units (one- and two-bedroom) to meet rising rental demand from singles, young couples, and non-local students. Nano flats may underperform as preferences shift toward larger units.
• The primary market is expected to see steady growth, especially in affordable, well-located developments.

Secondary Sales:
The secondary market is expected to approach the 2017-2020 average of nearly 40,000 units, reflecting a 10% year-on-year rebound.

• Low Taxes: Hong Kong’s property taxes remain low by international standards, particularly after the removal of certain curbs in early 2024.
• Economic Resilience: Despite global uncertainties, Hong Kong’s economy is supported by low unemployment and GDP growth.
• Shift from Renting to Buying: Lower borrowing costs make homeownership more attractive than renting for many.

While a return to the 2021 peak of 56,647 units is unlikely without a sharper price rebound, gradual recovery is anticipated. After a 27% price correction since late 2021 and income growth, housing has become more affordable.

Price Outlook: With primary market prices stabilizing and secondary market prices having already corrected, a modest 0-5% residential price gain is expected for 2025.

Newer vs. Older Properties: Buyer Considerations

Newer Properties:

• Best for Upgraders: With greater affordability, many buyers are seeking newer and larger units in desirable locations (e.g., Tseung Kwan O, Tsuen Wan West, Yuen Long, Tung Chung, Kai Tak).
• Price Outlook: Stabilization or moderate recovery is likely in these popular districts, although areas with significant new supply may see temporary price competition until inventory is absorbed.

Older Properties:

• Ideal for Yield-Focused Investors: Older units offer better value and are typically well-located, making them attractive to both home seekers and investors.
• Advantages: Lower entry prices, convenient urban locations, and higher rental yields (often exceeding mortgage costs).
• Caveats: Shorter mortgage terms and potential maintenance costs should be carefully considered.
• Notable Examples: Estates like Taikoo Shing, City One Shatin, and Kingswood Villas remain popular, especially those near universities.

Luxury Residential Market: Trends & Policy Impact

In 2024, over 100 new luxury homes (over HK$100 million) were sold, up from 73 in 2023, following the removal of demand-side stamp duties and the start of interest rate cuts.

Secondary luxury transactions have mainly involved distressed sellers, often requiring deep discounts for quick sales. However, as these properties are absorbed, the market is expected to stabilize, and prices should return to more typical levels.

The enhanced Capital Investment Entrant Scheme (CIES) now allows high-net-worth individuals to invest in residential property, which may further support luxury segment transactions and price stability. However, it may take time for new entrants to fully engage in the market.

Key Takeaways for 2025

• Homebuyers: 2025 offers attractive entry points, especially for first-time buyers and those upgrading to newer homes.
• Investors: Opportunities exist in both new and older properties, with the latter offering compelling yields.
• Luxury Segment: Policy changes and market stabilization suggest renewed activity, though price gains may be gradual.

As always, careful property selection and due diligence remain vital in the dynamic Hong Kong market.