Midland Realty: Hong Kong property prices stabilized in June, while rents continued to rise

Yang Mingyi, Senior Joint Director of the research department of Centaline Property, stated that the latest Centraline Rental Index (CRI) for cities in May reported a return rate of 3.54%, an increase of 0.06 percentage points compared to the previous month, reaching a new high since December 2011. The Hong Kong dollar interbank interest rate dropped sharply from nearly 4% to less than 1% in May, causing a simultaneous decrease in investment returns. The atmosphere in the Hong Kong property market has been warming up, with increased interest from buyers, but the rise in second-hand property prices is still hampered by low prices of new units. Despite this, rental transactions are active, entering a seasonal peak market period, with rents increasing further and pushing the return rate above the 3.5% mark. It is expected that property prices will stabilize in June, rental rates will continue to rise, and the CRI return rate is expected to increase and stabilize at 3.50%. Yang Mingyi mentioned that due to the continuous inflow of hot money, the Hong Kong dollar has triggered strong-side exchange guarantees multiple times, leading to a sharp decline in the interbank interest rate. In May 2025, the H interest rate dropped to 2.77%, the first time in nearly 3 years (after July 2022) that it fell below the maximum interest rate of 3.5%. During the same period, the rental return rate was 0.77 basis points higher than the H interest rate, indicating balanced supply and demand for rentals. Although the interbank interest rate has recently rebounded, banks' funds remain abundant, and the H interest rate continues to be lower than the maximum interest rate, coupled with anticipation of a rate cut by the Federal Reserve in the third quarter. It is expected that the CRI return rate will remain higher than the H interest rate. In May, the CRI_Mass return rate was reported at 3.70%, an increase of 0.07 percentage points compared to the previous month. The CRI (small and medium-sized units) return rate was reported at 3.66%, an increase of 0.07 percentage points month-on-month. Both the CRI_Mass and CRI (small and medium-sized units) return rates ended a 2-month decline and reached new highs since January 2012 and November 2011 respectively. The CRI (large units) return rate was reported at 2.89%, an increase of 0.02 percentage points monthly, returning to the level of February 2012. In terms of districts, the Kowloon CRI_Mass return rate was reported at 3.73%, an increase of 0.13 percentage points month-on-month, the second-highest since November 2011. The Hong Kong Island CRI_Mass return rate was reported at 3.67%, an increase of 0.11 percentage points month-on-month, reaching the highest level in over 14 years since November 2010. The New Territories West CRI_Mass return rate was reported at 3.73%, showing a stable trend month-on-month, returning to the level of July 2012. The New Territories East CRI_Mass return rate was reported at 3.63%, a decrease of 0.02 percentage points month-on-month, a total decline of 0.04 percentage points over 2 months, returning to the level of December 2012. Among the 143 constituent estates, 133 had return rates higher than the H interest rate (2.77%), indicating that over 90% of the estates were in a rental surplus situation, with 29 estates having rental returns of 4% or above, an increase of 7 from April. Some of the estates with higher returns include: Gardenia, Eagle's Garden, South Horizons, Beauty Garden, Fa Yun Shan Estate, and Riverside Garden. In terms of major estates, the return rates are as follows: Hong Fa Village 3.76%, Cityplaza 3.51%, South Horizons Peninsula 3.46%, Hang Yi Garden 3.75%, Mei Foo Sun Chuen 4.37%, Whampoa Garden 4.05%, City One 3.98%, Lei King Wan 3.8%, Shatin Regentville 4.17%, Tai Wo Hau Estate 3.81%, The Belcher's 3.22%, Ying Hai 3.18%, Horizon Gardens 3.75%, The Latitude 3.75%, Riviera Gardens 3.72%, and Yoho Town 3.21%.