Residential market rebound blocked until 12,000–13,000 units clear: Knight Frank

Knight Frank puts 2026 transactions at 65,000–68,000 units as monthly volumes run near 5,000.

Knight Frank said unsold housing stock remains the main constraint on a stronger residential price recovery in Hong Kong, with about 12,000–13,000 units still needing to be absorbed before prices can rebound more meaningfully.

The consultancy said developers are likely to rely on incentives and more flexible financing terms to clear existing inventory.

Monthly residential transaction volumes are currently about 5,000 units, according to Knight Frank, which forecasts full-year transactions of between 65,000 and 68,000 units in 2026.

In the mass residential market, Knight Frank expects a further interest rate cut that could push mortgage rates below 3%, supporting affordability.

It forecasts mass market home prices to rise by 5%–8% in 2026, with rents expected to increase by 3%–5%.

Knight Frank also forecasts land sale revenue of $12b to $15b in 2026, representing growth of about 60% YoY. Land premiums for private residential development are projected at $8b to $10b.

At the luxury end of the market, Knight Frank said activity has picked up. The super-luxury segment, defined as homes priced above $78m, recorded 80 transactions in the fourth quarter, the highest since the fourth quarter of 2021.

In the $50m-plus segment, seven deals were recorded in the first week of January, following 46 transactions in December. For 2026, Knight Frank forecasts luxury home prices to rise by about 5%, with luxury rents increasing by 3%–5%.