Hong Kong’s housing market is poised for a gradual recovery starting in the second half of this year, as population inflows, falling interest rates and a rebound in rental demand restore confidence, according to Bocom International.
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The investment bank said home prices could rise by 3 per cent over the next six months, followed by 5 per cent increases in both 2026 and 2027, as sentiment improved amid declining borrowing costs while returning residents and arriving professionals boosted demand.
The upbeat forecast came after signs of a cooling market amid geopolitical tensions and stock-market volatility. Property transactions in Hong Kong dropped to a three-month low in May, with the number of deals falling 11 per cent to 6,442 from a month earlier, according to data from the Land Registry.
“Key turning points are emerging despite lingering macro uncertainties,” Bocom analyst Philip Tse said in a report on Tuesday. He referred to a recent sharp drop in the one-month Hong Kong interbank offered rate (Hibor), a key reference for mortgage pricing, which fell to nearly a three-year low of 0.6 per cent on May 27 from 3.95 per cent on April 30 after interventions in the currency market by the Hong Kong Monetary Authority.
“We believe it will help restore confidence in the property market, boosting optimism among both homebuyers and investors, and supporting the sector’s stabilisation and recovery,” he said.
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Lower mortgage rates would ease repayment burdens on homebuyers, effectively reducing the cost of home ownership, while offering “a favourable opportunity for first-time buyers to enter the property market”, the bank said. A recent correction in home prices, steady rental yields and potential capital gains could also help revive interest from long-term investors, it added.