Hong Kong’s battered property market is staging a stronger-than-expected comeback, with home prices now forecast to rise as much as 15 per cent in 2026 as buyers return, new project launches accelerate and borrowing conditions become more supportive.
The latest forecast puts Hong Kong’s housing recovery firmly back in the spotlight. Midland Realty expects residential prices to finish the year about 15 per cent higher than 2025 levels, although prices would still remain roughly 16 per cent below their 2021 peak.
The forecast comes after a surprisingly strong first half for the housing market, with private home prices rising for 13 consecutive months through June. Official data showed prices had climbed 7.9 per cent during the first six months of 2026, marking the strongest first-half performance in seven years.
The recovery is being supported by several factors, including lower borrowing costs, stronger financial-market sentiment, returning mainland Chinese buyers and a gradual improvement in overall confidence.
Property developers are also becoming more aggressive.
After a period in which buyers were cautious and developers delayed launches, new residential projects are increasingly coming to market as companies attempt to take advantage of improving demand.
First-hand residential transactions, which fell to just over 800 units in both June and July, rebounded to about 1,100 units in August.
The recovery could accelerate further in the final three months of the year.
Midland expects first-hand residential transactions to jump about 50 per cent quarter on quarter to roughly 5,100 units in the fourth quarter. Secondary-market transactions are also projected to increase by around 10 per cent to approximately 12,700 units.
One of the strongest arguments supporting higher prices is Hong Kong’s rental market.
Residential rents have repeatedly reached record highs, increasing the financial incentive for some households and investors to buy rather than continue renting. The widening gap between rental costs and property prices could provide additional support for home values as the year progresses.
Interest rates are another critical factor.
Hong Kong’s monetary system closely follows US interest-rate movements because of the city’s currency peg to the US dollar. However, property-market executives expect local banks may not fully follow any further US rate increase this year, potentially limiting additional pressure on mortgage borrowers.
The change in financing conditions could be particularly important after years of high interest rates and weak housing sentiment.
Hong Kong’s property downturn had been one of the most severe in the region. Home prices fell sharply from their 2021 peak as higher interest rates, economic uncertainty, weak Chinese property sentiment and reduced investor confidence weighed on demand.
The government has since removed several major property-cooling measures, including restrictions that had increased the cost of purchasing homes and limited borrowing capacity for some buyers.
Those policy changes have helped unlock pent-up demand.
Mainland Chinese buyers have also become increasingly important to the recovery. Hong Kong’s property market has benefited from renewed capital flows from mainland China as wealthy buyers look for assets in the city and take advantage of relatively attractive valuations.
The luxury segment has shown particularly strong momentum.
Transactions involving homes priced above HK$50 million surged during the first half of the year, while the value of high-end primary-market sales more than doubled from a year earlier.
That does not mean the recovery is guaranteed to continue at the same pace.
Earlier forecasts from other analysts have been more cautious, warning that the rapid gains recorded during the first half could moderate as affordability remains stretched and external economic risks persist.
Hong Kong’s home prices were still significantly below their 2021 peak even after the recent rebound, meaning the market has considerable ground to recover before returning to previous highs.
There are also risks from financial markets and China’s economy. A weaker stock market, tighter capital controls or renewed economic weakness on the mainland could quickly affect investor confidence and demand for Hong Kong property.
Nevertheless, the direction of travel has changed dramatically.
Global investment banks have also become more optimistic about Hong Kong housing. JPMorgan has previously raised its 2026 forecast to between 10 and 15 per cent growth, while Goldman Sachs has also projected a 15 per cent increase.
That growing consensus suggests Hong Kong’s property market may have moved beyond a temporary bounce and into a broader recovery phase.
For homeowners, the latest forecast offers a potentially significant boost after several difficult years.
For buyers, however, the picture is more complicated. A stronger market means fewer bargains as developers and sellers regain pricing power, while rising prices could make entry increasingly difficult for first-time buyers.
Hong Kong may therefore be entering a new phase of its property cycle: not yet back to its historic peak, but no longer trapped in the prolonged downturn that defined the market in recent years.
If buyer demand continues to strengthen, rents remain elevated and financing conditions stay favourable, the city’s housing market could deliver one of its strongest annual rebounds in years.
The 15 per cent forecast is not a guarantee—but it is a powerful sign that Hong Kong’s property market may finally be turning the corner.
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