by WANG Yuhan

Hong Kong's property market rebounded sharply in the first quarter of 2026, with transaction volumes and prices rising as policy easing, lower borrowing costs and capital inflows supported demand.

Primary home sales led the recovery. Data from Centaline Property Agency showed 5,373 new residential transactions in the quarter, with total value reaching HK$62.8 billion, up 38% and 94% year on year, respectively — both record highs for the period.

Prices also strengthened. Midland Realty's home price index, which reflects deals signed about two weeks earlier, rose to 141.5, up 0.45% week on week and the highest level in more than two years. Prices have gained 5.04% so far this year, close to the full-year increase of 5.14% in 2025 and are up 12.05% from last year's low.

CHEN Yongjie, vice chairman for Asia-Pacific at Centaline, said the market had broken with the usual seasonal slowdown. He said demand rebounded early as prices recovered from last year's lows, with buyers moving sooner on expectations of further gains, while bulk purchases by large investors added momentum.

Strength in the primary market has extended to the secondary segment, reinforcing momentum across the market.

Secondary transactions reached 4,621 units in March, with a total value of HK$35.84 billion, up 18.1% and 20.7% from the previous month. For the quarter, transactions rose to 12,449 units worth HK$94.91 billion, up 13.6% and 12.4% respectively. Volumes hit an 18-quarter high, while value reached a 15-quarter high.

Price gains were broad-based. Midland's indices for Hong Kong Island, Kowloon and the New Territories all rose on a weekly basis, with year-to-date increases of 6.87%, 6% and 3.64%.

Rents also continued to rise. A rental index reached 200.8 in February, up 0.05% month on month and at a record high. Ricacorp Properties expects rents to increase by about 7% this year.

The rebound reflects a combination of policy, financial and structural drivers.

The removal of all property cooling measures in February 2024 released pent-up demand built up over more than a decade. Demand has since broadened beyond bargain-hunting to include owner-occupiers, long-term investors and rental-driven buyers.

Talent inflows have provided additional support. Over the past three years, Hong Kong has received nearly 600,000 applications under various admission schemes, with more than 410,000 approvals. Many new arrivals enter the rental market first before buying, creating a steady pipeline of demand.

Borrowing costs have also eased following the global rate-cut cycle, while lower deposit yields have reduced the appeal of cash holdings. At the same time, the Hang Seng Index rose 27.8% in 2025 and the city’s IPO market regained its global lead, boosting wealth effects.

As financial assets appreciate, high-net-worth investors have increasingly turned to property, particularly in core districts, as a defensive asset.

Mainland buyers have become a key source of demand following policy changes that aligned tax treatment with permanent residents.

Centaline data shows more than 13,500 mainland buyers entered the market in 2025, marking a second consecutive year above 10,000 transactions. The trend has continued into 2026, supported by talent inflows, with roughly 300,000 approved applicants coming from the mainland.

Buyer behavior has also shifted. Mainland investors are focusing more on liquidity, rental stability and long-term appreciation. Smaller units in core areas are favored, while traditional luxury districts attract asset-allocation buyers.

Kai Tak has become one of the most active areas, supported by new housing supply and infrastructure such as the Kai Tak Sports Park. Between January and March, the area recorded more than 500 rental transactions, more than doubling year on year.

Large-scale purchases have also increased. As of March 20, there were 265 bulk-buying cases in new projects, the highest level for the period since 2008. These deals involved 695 units worth HK$7.13 billion, accounting for more than 10% of primary transactions.

One standout project was SIERRA SEA by Sun Hung Kai Properties, which recorded 166 bulk deals covering 447 units, with total sales of HK$2.75 billion. The project also led overall sales with 1,468 transactions worth HK$9.18 billion.

Global banks have turned more optimistic on the outlook.

JPMorgan raised its forecast for Hong Kong home prices in 2026 to 10%–15%, from 5%–7%, and expects a further 5% increase in 2027, saying the market has moved into an expansion phase.

Citigroup lifted its forecast to 8% growth this year, citing limited land supply, declining inventory, population inflows and wealth effects from capital markets.

While geopolitical tensions have added uncertainty to the global economy, market participants see limited direct impact on Hong Kong property. Instead, such risks may reinforce the city's role as a capital haven.

Centaline said primary transactions could reach 7,000 units in the second quarter, with momentum expected to remain firm.