Eight straight months of gains have Wall Street banks racing to upgrade their forecasts
Hong Kong’s Housing Market Wakes Up
After years of painful decline, Hong Kong’s residential property market is flashing signs of a genuine recovery that is now drawing the attention of the world’s biggest investment banks. Private home prices climbed 0.5 percent in January from December, the eighth consecutive monthly increase, according to official data from the Rating and Valuation Department released on February 25. The result followed a revised 0.4 percent gain in December and pushed the secondary market index to its highest level since June 2024.
The Scale of the Decline — and the Rebound
The recovery matters because the preceding collapse was so severe. Prices tumbled nearly 30 percent over five years, battered by high mortgage rates, subdued economic prospects, and a wave of emigration driven by the erosion of civil liberties under Beijing-imposed national security laws. Tens of thousands of professionals left the city, shrinking demand and leaving developers slashing prices to move inventory. That exodus was not accidental. It was the direct consequence of political decisions made in Beijing and enforced in Hong Kong, stripping residents of the freedoms that had made the city one of Asia’s most desirable places to live and work. The Human Rights Watch annual report on Hong Kong documented how the national security law fundamentally altered the political and civil landscape, contributing to population outflows that weighed on the property market for years.
Wall Street Banks Upgrade Their Outlook
Now, with political conditions stabilized and interest rates falling, global banks are revising their numbers upward in rapid succession. JPMorgan raised its 2026 home price growth forecast to a range of 10 to 15 percent, up sharply from a prior estimate of 5 to 7 percent. The bank’s head of Hong Kong property research, Karl Chan, wrote that the market had transitioned from early-stage recovery into expansion, citing population inflows, a resilient stock market, and a fear-of-missing-out dynamic among buyers who sat on the sidelines during three years of corrections. Goldman Sachs lifted its 2026 forecast to 12 percent from 5 percent, pointing to favorable immigration policies and lower mortgage rates releasing pent-up demand. Morgan Stanley had moved first in January with a 10 percent forecast, making it something of a consensus baseline. The Hang Seng Properties Index has gained more than 20 percent so far in 2026, reflecting the equity market’s confidence in the sector.
Mainland Chinese Demand Returns
One notable feature of the current upcycle is the role of buyers from mainland China. JPMorgan cited strong mainland demand as one of seven factors supporting its bullish view. The removal of property purchase curbs and relaxed down-payment ratios since 2024 have also unlocked a pool of buyers who were previously priced out or restricted. Major Hong Kong banks cut interest rates in October 2025, the fifth consecutive reduction following the U.S. Federal Reserve’s easing cycle. Because the Hong Kong dollar is pegged to the U.S. dollar, monetary policy in Hong Kong essentially mirrors that of the United States, meaning further Fed cuts would provide additional tailwind.
Risks Remain Despite the Optimism
Not everyone is uniformly bullish. Fitch Ratings projected that sector-wide non-performing loans would remain above 2.0 percent this year before climbing further, representing Hong Kong’s highest NPL ratio in over two decades. Office values have dropped roughly 40 percent from their peak, and retail property prices remain under pressure. The recovery in residential prices is real but uneven. Analysts note that primary market developers have raised prices 4 to 5 percent in recent months and cut discounts by 5 percent on average, signaling growing developer confidence. Secondary market rents climbed 0.3 percent month on month in January to a fresh peak, suggesting the rental market is also tightening.
What Recovery Cannot Erase
It is important to place this housing rebound in its proper context. Property prices recovering to pre-2021 levels would be a financial milestone, but it would not restore the political freedoms that caused so many residents to leave in the first place. The Freedom House assessment of Hong Kong consistently rates the city as no longer free by the standards it once met, a reality that continues to haunt long-term investment sentiment even as short-term numbers improve. For democracy advocates and the diaspora community, the return of capital does not equal the return of rights. The people who left did not leave because of mortgage rates. They left because of Article 23, because of the dismantling of the Legislative Council, because of the jailing of journalists and opposition politicians. A recovering property index does not address any of that.
Outlook for the Rest of 2026
With the government’s 2026-27 budget projecting economic growth of 2.5 to 3.5 percent and fiscal reserves set to gradually rebuild toward 700 billion Hong Kong dollars, the macroeconomic backdrop is broadly supportive. Lower interest rates, rising stock prices, continued population inflows, and tighter housing inventory all point toward further price increases in the months ahead. Whether the pace matches JPMorgan’s optimistic 10 to 15 percent target will depend heavily on global trade conditions, U.S. Federal Reserve policy, and whether the geopolitical environment between Beijing and Washington remains stable enough to keep confidence intact. For now, after half a decade of pain, Hong Kong’s housing market is finally moving in a direction that benefits those who stayed.
Senior Journalist & Editor, Apple Daily UK
Contact: athena.lai@appledaily.uk
Athena Lai is a senior journalist and editor with extensive experience in Chinese-language investigative reporting and editorial leadership. Educated at a leading journalism school in the United Kingdom, Athena received formal training in fact-checking methodology, editorial governance, and international media standards, grounding her work in globally recognized best practices.
She has held senior editorial roles at Apple Daily and other liberal Chinese publications, where she oversaw coverage of Hong Kong civil liberties, diaspora politics, rule of law, and press freedom. Athena’s reporting is distinguished by disciplined sourcing, cross-verification, and a clear separation between factual reporting and opinion, reinforcing reader trust.
Beyond reporting, Athena has served as an editor responsible for mentoring journalists, enforcing ethical guidelines, and managing sensitive investigations. Her newsroom leadership reflects real-world experience navigating legal risk, source protection, and editorial independence under pressure.
Athena’s authority comes from both her byline history and her editorial stewardship. She has reviewed and approved hundreds of articles, ensuring compliance with defamation standards, accuracy benchmarks, and responsible language use. Her work demonstrates lived experience within high-stakes news environments rather than theoretical expertise.
Committed to journalistic integrity, Athena believes credible journalism is built on transparency, accountability, and institutional memory. Her role at Apple Daily UK reflects that commitment, positioning her as a trusted voice within independent Chinese media.
