Home prices may rise up to 10% in 2026: Knight Frank

Residential transactions are projected to increase 20%.

Mass residential prices could rise by 8% to 10% in 2026 as low mortgage rates, improving sentiment, and returning mainland Chinese demand support the market, according to Knight Frank.

Residential prices had increased for about 11 consecutive months as of April, whilst monthly transaction volume reached around 6,600 deals.

Knight Frank expects total residential transactions to reach 75,000 to 80,000 units this year, representing a 20% increase from 2025.

Primary-market transactions are projected to account for 35% of the total, whilst secondary-market deals will make up the remaining 65%.

Residential rents could rise by 5% to 8% and potentially reach new highs, supported by demand from incoming talent and non-local students.

The luxury market is also expected to strengthen, with prices forecast to increase by 5% to 8% and rents by 3% to 5%. Luxury prices remain 6.7% below their peak in the fourth quarter of 2021.

In the office market, Hong Kong Island Grade-A rents could rise by 1% to 5%, led by Central, where rents are forecast to increase by 8% to 12%.

Demand in Central has been supported by banking, securities, private wealth, asset management, and co-working firms.

Kowloon’s office market is expected to remain weaker. Overall rents may fall by 1% to 3%, whilst Kowloon East could record a decline of 4% to 6%.

Investment activity has already rebounded. Properties valued at $100m or more recorded $29.5b in transactions across 59 deals from January to May, with both deal value and volume rising 111% YoY.

Offices accounted for 62.5% of major property transactions, whilst the living sector represented 32%. Retail made up 4.9%.

Knight Frank expects the retail market to remain polarised. Prime street-shop rents could increase by 5% to 10%, whilst prime mall rents may rise by up to 5%.

Non-core mall rents are expected to remain flat or fall by as much as 5% as online shopping and changing spending habits continue to weigh on neighbourhood and mid-market retail centres.

Knight Frank also projected Hong Kong’s land-sale revenue at $18b to $22b in 2026, representing an increase of about 130% YoY.