Hong Kong’s residential property market continues to face challenges in early 2025, with home prices still downward. According to a recent report by Knight Frank, the housing price index fell by 0.45% in January, marking the lowest level in over eight and a half years. This decline reportedly follows a 0.65% drop in December 2024, bringing prices to nearly 28% below their peak in September 2021.
According to the data, February saw a significant drop in residential sales transactions, with only 3,200 properties sold, an 11.7% decrease month-on-month. However, there was a positive shift in first-hand sales, which saw a 17% increase from the previous month, reaching 900 transactions. This uptick signals a potential revival in buyer sentiment, possibly spurred by recent policy changes.
One key development that could boost the market is adjusting the stamp duty threshold in the 2025-26 Budget. The threshold for homes eligible for the HK$100 stamp duty has been raised from HK$3 million to HK$4 million. This change is expected to attract more first-time buyers into the primary market, potentially driving residential transactions up by 5% to 10%.
Several new developments featuring units priced below HK$4 million or under HK$10,000 per square foot have seen strong buyer interest. Projects with attractive pricing and significant discounts are selling out quickly in their initial launches.
While the broader market faces pressure, the luxury segment remains relatively resilient. Luxury residential projects offering larger units exceeding 1,000 square feet have seen high demand, with prices surpassing HK$30 million. Similarly, luxury mansions selling this year, with prices reaching over HK$50,000 per square foot, indicate that affluent buyers still have confidence in the high-end market.
Looking ahead, the prospect of further interest rate cuts in 2025 and an improved Hang Seng Index are encouraging home buyers to return to the market. This shift in consumer sentiment, coupled with increased activity in the primary market, suggests that Hong Kong’s residential market may be at a turning point. As confidence continues to grow, it is anticipated that home prices could bottom out in the first half of 2025, potentially paving the way for a more robust recovery in the second half of the year.
