Knight Frank: Expect Hong Kong property market to remain stable in the second half of the year, with a projected price increase of nearly 10% for the entire year.

Rosanna Tang, Deputy General Manager of Knight Frank and Head of Research in Hong Kong, stated that in the second quarter of this year, the residential market in Hong Kong continued the momentum of recovery from the beginning of the year, with overall trading remaining active. The total number of transactions in the second quarter exceeded 22,000, reaching a new high since the second quarter of 2021. It is expected that the residential transaction volume in Hong Kong this year will reach around 75,000 transactions, and property prices are expected to rise by nearly 10% for the whole year. The future direction of US interest rates in the second half of the year may have greater variables, but with the support of local end-users, students and settlers arriving in Hong Kong, it is expected that the property market will remain stable in the second half of the year. Rental prices are expected to increase modestly, by around 5% within the year. Kenny Lai, Senior Director of Valuation and Advisory Services at Knight Frank Hong Kong, cited data from the firm indicating that although prices of small and medium-sized residential properties rose by about 9% in the first half of the year, the number of price inquiries in June dropped sharply by 16.3% compared to the previous month, with the figures for July even lower than those at the end of June, reflecting a slowdown in purchasing power to some extent. Lai expects that the rate of increase in the third and fourth quarter will enter a consolidation phase, with fluctuations expected to be only around 1% to 2%. Lai continued to state that if property prices rise too sharply in the short term, for example by 10% to 15% for the whole year, he believes that the government may introduce measures to suppress the property market at any time, such as imposing heavy taxes on foreign investment buyers as seen in Singapore. However, he also anticipates that investors will sell off their properties in the second half of the year, leading to an increase in supply in the third and fourth quarters, thereby increasing bargaining opportunities. Vincent Chiu, Managing Director of Knight Frank Hong Kong, pointed out that with a significant acceleration in rental increases in the Central district in the first half of 2026, it is expected that the upward trend will slow down in the second half of the year. Overall, rental increases in Central are expected to reach 10% to 12% for the whole year, driving rents for Grade A office buildings in Hong Kong to rise by 4% to 6% in 2026, an increase from the initial forecast of 1% to 3%. In terms of the investment market, Kevin Wong, Executive Director and Head of Capital Markets in Hong Kong at Knight Frank, believes that demand in the second half of the year will still be mainly driven by buyers for personal use and the rental market segment, and also expects investors to actively expand their land reserves for private residential properties. He predicts that the total investment in large non-residential properties in 2026 is expected to exceed last year's level of 40 billion Hong Kong dollars.