China Decree 837 dims mainland demand for HK homes: report

Residential prices are still expected to rise 7% this year. 

China’s tighter rules on outbound investments may reduce mainland demand for Hong Kong homes, even as the city’s residential market is expected to grow this year, according to UOB Kay Hian. 

The brokerage said the rules will require covered investors to report and register qualifying overseas transactions, raising concerns over funding from mainland buyers. 

In the first four months of 2026, buyers with Putonghua-pinyin names accounted for about 28% of Hong Kong housing transaction value. 

“Their share in the primary market is higher at about 40%,” it added.

On 1 June, China’s State Council released ‘Decree 837’, bringing individual mainland residents into the framework of outbound investment regulation.

UOB Kay Hian said major funding sources for mainland buyers include offshore income, China’s annual $391,848 (US$50,000) foreign exchange quota, and one-off asset transfers linked to overseas permanent residency.

However, it noted that the annual quota is not allowed to be used for overseas property purchases under rules updated in 2016.

Whilst the rules are likely to curb investment demand from mainland buyers, they should not affect mainland professionals who live or work in Hong Kong and buy homes for their own use.

The brokerage kept its forecast that Hong Kong residential prices will rise 7% in 2026.

Hong Kong home prices continued to rise in March and April despite wider geopolitical risks. The Centaline City Leading Index reached 157.90 points as of 5 June, up 9.6% year to date.

Residential rents also increased, although at a slower pace, UOB Kay Hian said 

“We expect leasing activity to accelerate in the second and third quarter of 2026, as summer traditionally marks the peak rental season driven by non-local student inflows,” it added.

Primary market sales value rose 99% year on year, whilst secondary market transaction value increased 53%.

$1 = US$0.13