Translating to Link REIT: Household incomes in Hong Kong remain stable in the fourth quarter, credit is no longer seen as a "necessity"

Hanlian's 2025 fourth quarter consumer survey shows that despite continued pressure on the job market, household incomes in Hong Kong remain generally stable. Consumers, in a cautiously optimistic mood, actively manage their personal finances and show resilience. In addition, as the macroeconomic environment continues to change, consumers' views on credit have also changed. Credit is no longer seen as a "necessity," but rather as a choice that must be carefully considered. According to the survey, the job market in Hong Kong continues to be under pressure, with the unemployment rate reaching a three-year high at the end of the third quarter of this year, with youth unemployment rate reaching as high as 8%. However, the majority of households in Hong Kong had stable incomes in the fourth quarter of 2025. More than half of Hong Kong consumers said that their incomes remained the same over the past three months, a three percentage point increase compared to the same period last year. The percentage of respondents reporting a decrease in income dropped from 14% last year to 12%. The data reflects the strong financial position of the majority of Hong Kong households, with their incomes generally remaining stable rather than decreasing. Meanwhile, the overall economy in Hong Kong remains stable, with local GDP growth in the first three quarters of 2025 remaining at 3% or above. Despite continued economic growth and a slowdown in the job market, consumers remain optimistic about their income prospects for 2026. Most respondents expect their income to increase or remain stable in the next 12 months, with nearly half expecting an increase, demonstrating that Hong Kong households are showing greater resilience than expected in the face of uncertain economic prospects. In the fourth quarter of 2025, stable incomes relieved financial pressure for many households. Only a small number of consumers expressed concern about not being able to fully pay at least one current bill or loan, a significant drop from 20% in the same period last year, marking a new low for the past five quarters. This improvement is in line with the moderate recovery in consumer optimism, with 54% of respondents expressing optimism about their family's financial prospects for next year, a slight increase of two percentage points compared to the previous year. Although the increase is limited, it is clear that the number of consumers affected by current financial pressures is decreasing, while their confidence in future prospects is gradually increasing. However, the cost of living remains the main source of pressure for consumers. Over sixty percent of respondents said that inflation in daily necessities is the primary concern affecting their family's financial situation in the next six months, followed by employment prospects. It is worth noting that 42% of respondents said they are somewhat or very concerned about the current or potential impact of global trade tariffs on their family's financial situation; another 48% think that rising product prices are the main impact of tariffs. Facing these uncertainties, consumers adopted practical consumption strategies in the third quarter of 2025, and continued this into the end of the year, demonstrating stronger financial management and risk awareness. In the past three months, 38% and 20% of consumers prioritized increasing emergency funds and retirement savings respectively. Looking ahead to the upcoming holiday shopping season, only a quarter said they plan to increase non-essential expenses such as dining out, travel, and entertainment, while 41% plan to tighten related expenses. This prudent financial attitude allows Hong Kong consumers to strike a balance between improving macroeconomic conditions and daily spending pressures, and maintain confidence in the future. Sun Weihan, Chief Consultant of Research and Advisory at Hanlian Asia Pacific, stated that despite economic challenges such as rising unemployment, most Hong Kong consumers reported stable incomes and many households hold optimistic views on the future. Meanwhile, consumers have shown a practical attitude, actively strengthening financial buffers, and prudently controlling short-term expenses to enhance personal financial resilience, thereby striking a balance between improving macroeconomic conditions and the pressures of daily expenses. Especially as the holiday season approaches, consumers are adopting a dual-track strategy of increasing savings and prudent spending, actively preparing for the coming year to address potential inflation pressures. The survey also found that consumers' views on credit underwent a significant change in the fourth quarter of 2025. Less than half of respondents believed that credit and loan products are extremely or very important for achieving their financial goals, a decrease from 53% in the fourth quarter of 2024. This change is particularly pronounced among Generation Z, with the percentage dropping from 70% to 54%. At the same time, in terms of confidence in obtaining the necessary credit, only 61% of Generation Z are confident that their credit applications will be approved when needed, a significant decrease of 15 percentage points. This indicates that rising borrowing costs and pressure on the job market have led to changes in consumer perceptions of credit, especially among younger generations.