Residential rent prices to continue to rise in 2025, analysis shows
Rentals for private residential property in Hong Kong saw a slight increase of 0.36% last month, marking an end to a two-month downward trend. This change reflects a gradual recovery in leasing demand, supported by improvements in the economic environment.
Over the past year, rents rose nearly 3.9%, contributing to a cumulative increase of 10% over the last two years. This upward trend is primarily driven by stable local demand and government talent initiatives that have bolstered the rental market.
Martin Wong, the Senior Director at Knight Frank, noted that the rental sector is currently outperforming the property sales market. Many locals are opting to rent instead of buy, indicating a shift in consumer behavior. Wong forecasts that residential rents will continue to rise this year, with an expected increase of 3% to 5%. Similarly, Ricacorp predicts rents could grow by 5% to 8% throughout the year. As the economy continues to improve, particularly in the second half of the year, the demand for rentals is anticipated to increase further. Additionally, the prevailing low interest rates are expected to make renting more attractive, as they lower the costs associated with purchasing a home.
In terms of property prices, S&P Global Ratings projects stability in 2025, with prices expected to remain flat over the year. While the demand for homes may improve due to declining mortgage rates and government market stimulus measures, the issue of oversupply will still pose a challenge, limiting the potential for significant price increases. Developers are likely to adopt conservative pricing strategies to manage their inventory, which will further restrict the upward movement of property prices.
In summary, while the rental market is on an upward trajectory, the future of Hong Kong's real estate sector will largely depend on the pace of economic recovery, the support of government policies, and the restoration of market confidence.
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