Hong Kong home rents surge to near record highs as flat prices sink further

Residential rents in Hong Kong jumped to the fourth-highest level on record last month while prices for lived-in homes slumped to an eight-year low, due to a seasonal influx of renters and bets that home prices will fall further, according to analysts.

The official index of residential rents in the city rose 1.13 per cent to 197.5 in August from July’s reading of 195.3, according to data released by the Rating and Valuation Department on Thursday. Rents have surged 6.8 per cent from a year earlier.

Meanwhile, secondary home prices in August sank 1.72 per cent month on month to an index reading of 292.1, the fourth straight monthly decline and the lowest reading since the gauge hit 287.6 in August 2016. Lived-in home prices have dropped 13.32 per cent year on year and 6.17 per cent since the end of 2023.

The figures do not reflect the market’s reaction to the half-point reductions in interest rates made last week by the US Federal Reserve and the Hong Kong Monetary Authority. Given that more policy easing is in the offing, home prices are likely to stabilise and rents are expected to moderate over the short to medium term, according to property consultancy CBRE.

Still, property agency Ricacorp Properties estimates rents will increase by 9 per cent this year, propelling the index to a record.