Private rental prices inches up just 3% below historical peak

The rental index for Class A and B units increased 6.9% and 7.3% YoY. 

The private domestic rental index for Class A, B, and C units rose by 6.9% year-on-year (YoY) in July 2024, its highest since 2019, according to JLL's latest Residential Market Monitor. 

The rental index for Class A and B (sized between 431 and 752 square feet) units increased 6.9% and 7.3% YoY respectively whilst Class C units had a steady 6.3% YoY increase.

Between June 2023 and June 2024, the average domestic household size decreased from 2.7 to 2.6 individuals, contributing to a 1.5% YoY rise in the number of households to 2.76 million, thereby  increasing tenant-to-owner-occupier ratio. 

Moreover, a recent survey found that 86% of non-local talent respondents are leasing their accommodations, a proportion significantly higher than that of the overall population.

"Further government policies aimed at attracting talent, such as the broadening of eligibility under the Top Talent Pass Scheme, are expected to further support a sustained demand for rental properties. Hence, we anticipate the upward momentum in rent and market yields will persist in the near term,” Norry Lee, Senior Director of Projects Strategy and Consultancy Department at JLL in Hong Kong said. 

However, Lee said that Hong Kong's population contraction by 4,300 individuals in mid-2023 and mid-2024 will affect residential rents. 

This is attributed to a negative natural population change of 18,100 and a negative 30,200 movement of others, offset by an inflow of 44,000 One-Way Permit holders. 

He also noted the slow increase in median monthly household income will fail to keep pace with rising rents.

“The job market is also exhibiting signs of strain, particularly in the FIREBS sector, where the number of employed persons decreased by 15,000 YoY in Q1 24. This sector's contraction could have broader implications for housing demand, particularly among expatriates and high-income earners,” he added.