Executive Summary: Key Takeaways on Hong Kong’s Market Turnaround
As China’s national housing market shows tentative signs of stabilization, Hong Kong has surged ahead, becoming the first major city to post a clear and sustained price recovery. This shift holds critical implications for investors monitoring Chinese equities and real estate assets.
– Hong Kong’s private residential price index rose approximately 3.25%–3.3% in 2025, marking the first annual increase since 2021, with transaction volume hitting a four-year high.
– The rebound is driven by a confluence of factors: the full withdrawal of property cooling measures (‘撤辣’), falling mortgage rates tied to U.S. Fed policy, improving rent-to-price ratios, and robust demand from mainland Chinese buyers.
– Mainland buyers accounted for an estimated 25% of all residential sales in Hong Kong during 2025, a record high, fueled by talent immigration schemes and educational expansion.
– Experts like Centaline Group founder Shi Yongqing (施永青) project a multi-year upcycle, with prices potentially rising 85% from 2025 to 2031, though risks remain from global economic headwinds.
– This recovery in Hong Kong’s housing market rebound offers a potential leading indicator for sentiment shifts in Greater China’s asset markets, presenting both opportunities and strategic considerations for institutional portfolios.
A Beacon of Recovery in a Tepid National Landscape
The early months of 2026 have delivered a glimmer of hope for China’s beleaguered property sector. Data released on February 13 by the National Bureau of Statistics (国家统计局) showed that in January, the month-on-month decline in new and second-hand home prices across 70 major cities generally narrowed. Second-hand homes in first-tier cities saw a price drop of 0.5%, an improvement of 0.4 percentage points from December. Yet, this national story of decelerating declines is being dramatically upstaged by a full-fledged rally in one special administrative region. Hong Kong has not only stopped the bleeding but has ignited a convincing price upswing, establishing itself as the first city with a sharp rise in housing prices amidst China’s broader market adjustment.
This Hong Kong’s housing market rebound is both pronounced and data-driven. The Hong Kong Special Administrative Region Government Land Registry (香港特区政府土地注册处) data reveals that 2025 saw 80,702 building sale agreements, a jump of 18.7% year-on-year to the highest level in four years, with total value reaching HK$614.28 billion. More critically, the private domestic housing price index posted an annual increase of about 3.25% to 3.3%—the first positive annual change since 2021. The Centaline City Leading Index (CCL, 中原城市领先指数), which tracks secondary market prices, bottomed in March 2025 and has been climbing steadily since May.
Statistical Evidence of a Sustained Upswing
The momentum has carried into 2026. As of the second week of February 2026, the CCL showed a week-on-week increase of 1.47% and a month-on-month rise of 3.29%. This consistent upward trajectory has shifted market psychology from caution to optimism. Centaline Group founder Shi Yongqing (施永青) offered a bullish forecast in late 2025, predicting that Hong Kong home prices would surpass their 2021 peak within three years and could embark on a six-year rising cycle from 2025 to 2031, with cumulative gains potentially reaching 85%. This outlook underscores the growing confidence that the Hong Kong’s housing market rebound is structural, not fleeting.
Anatomy of a Rebound: How Hong Kong Engineered a Turnaround
The resurgence is not accidental but the result of specific policy choices and economic alignments. While mainland cities grapple with balancing support measures with the ‘housing is for living, not speculation’ principle, Hong Kong has deployed a more direct toolkit to stimulate demand and restore liquidity.
The Catalytic Role of ‘撤辣’ – Scrapping the Property Cooling Measures
The most significant policy catalyst was the full withdrawal of the Special Stamp Duties, colloquially known as the ‘辣招’ or ‘spicy measures,’ in February 2024. These measures, enacted years earlier to curb speculation, included a Buyer’s Stamp Duty (BSD) on non-local purchasers and a New Residential Stamp Duty (NRSD) on second-home buyers. Their removal dramatically reduced transaction costs. For a mainland Chinese buyer, the maximum additional tax burden fell from 30% to standard rates. An interviewee, Shi Lian (施连), noted that ‘撤辣’ saved her over HK$2 million on her purchase. This policy shift instantly made Hong Kong property more accessible to a key demand demographic: mainland investors and new residents.
Monetary Policy Tailwinds and the Economic Calculus
Hong Kong’s monetary policy, linked to the U.S. dollar through its currency peg, has provided a second wind. As the U.S. Federal Reserve entered a rate-cutting cycle, Hong Kong’s mortgage rates followed suit, reducing monthly carrying costs for buyers. Shi Lian reported securing a mortgage with an effective annual rate around 3.25%. Furthermore, banks offer linked deposit accounts where idle funds earn interest at the mortgage rate, effectively creating a hedge. ‘Every step of the process encourages you to take out a mortgage and buy,’ she observed.
The most compelling driver for many, however, is a stark improvement in investment fundamentals. While prices fell from 2021 to early 2025, rents rose consistently. This improving yield has made property ownership increasingly rational. For a flat with a monthly mortgage payment of HK$24,000, a comparable rental income can now fully cover the loan, leaving the owner to pay only management fees. This positive cash flow scenario, absent for years, has brought investors back to the market. The Hong Kong’s housing market rebound is, therefore, underpinned by both policy support and sound financial logic.
The Mainland Buyer Surge: A Structural Demand Shift
A critical engine behind the rising sales volume and prices is the unprecedented influx of mainland Chinese purchasers. Data analyzed by Midland Realty (美联物业) based on Land Registry records indicates that in 2025, mainland buyers (identified by surname拼音) registered 13,906 deals for primary and secondary homes in Hong Kong, a 14.1% increase from 2024, with a total value of HK$137.9 billion. This means approximately one in every four residential units sold in Hong Kong last year was purchased by a mainland buyer, setting new historical records for both volume and value.
Demographic Drivers: Talent and Students
This demand stems from two primary streams. First, the various talent admission schemes, notably the Top Talent Pass Scheme (高才通计划) launched in 2022, have brought a wave of high-income professionals and their families. By mid-December 2025, over 570,000 applications were received across all talent schemes, with nearly 400,000 approved and about 260,000 talents and dependents having arrived. As Li Yujia (李宇嘉), Chief Researcher at the Guangdong Provincial Urban & Rural Planning Institute Housing Policy Research Center, pointed out, this has ‘generated huge housing demand, both for rental and purchase.’
Second, Hong Kong’s expansion of non-local student quotas at its eight publicly funded universities from 20% to 40% starting the 2024/25 academic year is creating a sustained demand base from mainland families. With campus-area rents soaring, parents are finding it more economical to make a down payment and purchase a property for their child’s use rather than paying high rents. This end-user demand adds stability to the current Hong Kong’s housing market rebound, distinguishing it from purely speculative bubbles of the past.
On-the-Ground Sentiment: From Bargain Hunting to Seller’s Market
The shift in market dynamics is palpable among buyers, sellers, and agents. Shi Lian’s experience is illustrative. After years of working in Hong Kong, she decided in late 2025 that prices in the core Central and Western District (中西区) had ‘oversold’ after a 30% decline from peaks. She purchased a nearly new 25-square-meter unit near the University of Hong Kong for HK$7 million, having negotiated an HK$800,000 discount from the initial asking price. She noted that at that time, many owners were eager to sell even at a loss to exit positions. Fast forward a few months, and the psychology has flipped.
Dong Yu (东宇), an agent in the Yuen Long (元朗) district near Shenzhen, confirms the change. ‘From January till now, it’s been rather intense,’ he said. ‘It’s now a situation where people want to buy but there’s nothing [available] to buy, unless they offer a higher price.’ He has clients proactively asking landlords of rented properties if they are willing to sell. Sellers, sensing the momentum, are beginning to test higher prices, with increments ranging from tens of thousands to millions of Hong Kong dollars. This tangible shift from a buyer’s to a seller’s market is a hallmark of the deepening Hong Kong’s housing market rebound.
Comparative Context: Why Hong Kong Leads While Mainland Markets Stabilize
Understanding Hong Kong’s unique position requires contrasting it with the mainland market. The national data shows decelerating price declines, a sign that broad-based stimulus measures are having a moderating effect. However, mainland markets remain burdened by high inventory, developer debt issues, and consumer caution. Hong Kong’s different system allowed for more decisive action.
Divergent Policy Responses and Market Structures
Hong Kong’s ‘撤辣’ was a swift, unambiguous removal of transaction barriers. In contrast, mainland support has been more incremental, involving down payment reductions, mortgage rate cuts, and city-specific easing, all within a broader framework of preventing speculation. Furthermore, Hong Kong’s supply pipeline is tightening. As developers pulled back on land acquisition during the downturn, new housing supply is expected to diminish over the next 2-3 years, creating a more favorable supply-demand balance. Hong Kong’s status as an international financial hub also means it is more immediately sensitive to global capital flows and interest rate cycles, which have recently turned favorable.
The Hong Kong’s housing market rebound thus serves as a case study in how a targeted policy reset, coupled with improved affordability metrics and exogenous demand, can reignite a stalled property sector. It demonstrates that price recovery is possible even after significant corrections, provided the fundamental drivers of demand are present and activated.
Future Trajectory and Strategic Implications for Investors
The critical question for global investors and fund managers is whether this recovery is sustainable and what it signals for Chinese asset allocation. The consensus among market participants interviewed is that the upward trend has room to run, but not without caveats.
Projections, Risks, and Portfolio Considerations
Bullish forecasts like that from Shi Yongqing (施永青) suggest a long runway for growth. The improving yield, limited new supply, and steady inflow of mainland demand provide a solid foundation. However, risks persist. The recovery is still nascent, and prices in many districts remain below 2021 highs. Hong Kong’s economy and asset markets remain vulnerable to global economic slowdowns, prolonged high interest rates in the West, or geopolitical tensions. A sharp downturn in mainland economic sentiment could also dampen cross-border investment enthusiasm.
For investors, the Hong Kong’s housing market rebound presents several actionable insights:
– Monitor Hong Kong property stocks and REITs as a potential hedge or growth segment within China-focused equity portfolios.
– Consider the knock-on effects on related sectors: banking (mortgage growth), retail (wealth effect), and construction.
– Use Hong Kong as a leading indicator for sentiment shifts in luxury and investment-grade real estate in gateway mainland cities like Shanghai and Shenzhen.
– For direct investment, conduct thorough due diligence on location and yield, focusing on areas benefiting from infrastructure development or talent influx.
Synthesizing the Hong Kong Housing Rebound Narrative
Hong Kong has unequivocally emerged as the first city in China to chart a decisive path out of the post-pandemic property downturn. This Hong Kong’s housing market rebound is multifaceted, powered by deliberate policy easing, favorable financing conditions, a compelling rent-to-buy equation, and a seismic wave of demand from mainland China. While the national market inches towards stability, Hong Kong’s vibrant recovery offers a template of how liquidity and confidence can be restored in a major urban market.
The mood on the ground reflects this shift. As Shi Lian remarked, comparing the gloomy years of falling prices and weak stock markets to today, ‘I think there really is a wealth effect. After the stock market improved, the property market stabilized, and gradually, sentiment has risen.’ The interplay between transaction volume and price has created a virtuous cycle, reinforcing the recovery. For international investors and market watchers, Hong Kong’s experience provides critical, real-time intelligence on the potential turning points in Chinese asset markets. It underscores the importance of granular, city-level analysis beyond national headlines.
The forward-looking guidance is clear: closely track the momentum in Hong Kong’s transaction data and price indices, as they may foreshadow broader regional trends. Evaluate exposure to Hong Kong’s real estate ecosystem, balancing the optimistic projections with a prudent assessment of global macroeconomic risks. Ultimately, Hong Kong’s market has lit a beacon, demonstrating that under the right conditions, a property sector can transition from downturn to growth, offering valuable lessons and opportunities for the astute observer of Chinese equities and real estate.