Property slump deepens with weak Q1 across sectors

The average price index for private domestic units dropped to 284.2, down from 298.7 in 2024.

Hong Kong’s property market continued its decline into the first quarter of 2025, with residential, office, and retail sectors all showing signs of weakening demand and falling values, according to the latest government data.

Residential property prices across all size categories fell further in early 2025. The average price index for private domestic units dropped to 284.2, down from 298.7 in 2024. Rents remained more stable, but the rental index edged down to 193.3 in March 2025.

Even popular housing estates weren’t spared. Price indices for selected developments dipped below 245, reflecting shrinking buyer confidence.

However, there are early signs of stabilisation. According to Eddie Kwok, Executive Director of Valuation & Advisory Services at CBRE Hong Kong, “residential prices stabilised after dropping for four consecutive months. In April 2025, residential prices went up by 0.4% m-o-m.” He said this modest rebound could signal a technical bottoming out.

Kwok also pointed to easing financing costs as a potential driver of recovery. “Positive carry for residential properties resurfaces as 1M HIBOR dropped in May. If this trend can sustain, the residential property market likely experiences a recovery as it may cost less to repay mortgage as compared to rent.”

Still, he tempered expectations for a strong rebound. “Whilst residential prices are bottoming out, significant rises are not expected in 2025. At this moment, developers’ priority still lies in clearing mounting inventories. Certain developers are expected to grab the opportunity to replenish their capital, while financially resilient developers may opt for reduced price cuts.”

CBRE also noted that market responses would likely vary depending on developers’ financial positions. Inventory pressure is pushing some to adopt more aggressive pricing to raise capital, whilst stronger players may hold off on further reductions.

Grade A office rents in core districts like Central and Wan Chai also fell, with the overall index dropping to 214.6. The price index for Grade A offices plunged to just 321.9.

Across the board, office spaces are feeling the pressure from excess supply and weaker corporate leasing. Some areas saw limited transactions.

The retail property market remained volatile. Whilst Hong Kong Island saw rents stabilise, prices across Kowloon and the New Territories fluctuated. The average retail rent hovered around $1,072 to $1,089 per square metre, but selling prices showed erratic swings, particularly outside the city center.

The report also noted a continued pipeline of new completions in both residential and non-residential sectors.

Sale and purchase agreement numbers dropped across both primary and secondary markets, with the total transaction value dipping.