Rate-cut hopes draw cautious buyers back to Hong Kong's housing market

A tentative shift is underway in Hong Kong's residential property market as buyers, anticipating a cut in the city's base lending rate, start to trickle back into show flats and auction rooms after months of paralysis.

Economists at the Hong Kong Monetary Authority (HKMA) last month signalled that borrowing costs could ease before the end of 2026, according to the central bank's June monetary policy statement. That forecast has begun reshaping behaviour in a city where the median flat price sits between HKD 8 million and HKD 10 million, according to citywide transaction data compiled by the Rating and Valuation Department.

Kowloon and the New Territories lead the early rebound

The most visible pickup is in Kowloon's mid-tier corridor. Agency sources report that viewings at newly completed developments along Prince Edward Road West, near Mong Kok, climbed 18 percent in the fortnight ending July 8 compared with the previous two weeks. The surge is concentrated in two-bedroom units priced between HKD 6 million and HKD 8 million, a bracket that in May saw the steepest price drops of any segment, falling roughly 4 percent month-on-month according to data from Centaline Property Agency.

Further north, in the New Territories, first-home buyers are circling older estates in Sha Tin and Tsuen Wan. A sales clerk at a Midland Realty branch in Sha Tin said that inquiries for flats in the 30-year-old City One complex jumped by a quarter in the last week of June, though she declined to provide exact figures.

The luxury segment on the Peak and in Mid-Levels remains sluggish. Prices there have held firmer than the mass market, declining only about 1 percent in the second quarter, per Savills Hong Kong's latest market report, but transactions have thinned as wealthy buyers wait for clearer rate signals before committing tens of millions of dollars.

Stamp-duty reprieve fails to ignite a full-blown rally

The government's decision in February to halve the stamp duty for foreign buyers, cutting the rate on non-permanent residents to 15 percent from 30 percent, has not yet produced a sustained uptick in cross-border demand. Immigration Department data show that only 142 properties were purchased by non-local individuals in April and May, up from 98 in the same period last year but still well below the monthly average of 300 seen before the 2024 cooling measures.

What is moving the dial now, says a market analyst at Jones Lang LaSalle Hong Kong who asked not to be named because he was not authorised to speak publicly, is the forward guidance from the HKMA. The HKMA's June statement projected that the base rate, currently pegged at 5.75 percent, could drop by at least 50 basis points before year-end if the Federal Reserve follows through on its own easing cycle.

For a buyer financing a HKD 7 million mortgage over 30 years, a half-point cut would reduce monthly repayments by roughly HKD 1,800, enough, realtors say, to tip marginal buyers from renting to buying.

Looking ahead, the property market will likely remain a two-speed affair until the HKMA actually delivers a rate cut. The New Territories and Kowloon's mid-tier corridors may see a gradual rise in transactions, but the luxury segment and the resale market for older units in prime locations will face continued headwinds. Brokers advise any buyer currently sitting on pre-approved mortgages to lock in their rate quotes now; most banks are still honouring 30-day rate guarantees, but that window may close once the HKMA moves.

This article is general information only and is not personal financial or investment advice. Consider your own circumstances and seek licensed professional advice before making financial decisions.