Hong Kong's Residential Property Market Analysis 2025

Hong Kong’s residential property prices remain on a downward trend, despite recovering demand and stronger construction activity. This comes after the government lifted market cooling measures and as interest rates continue to gradually decline.

This extended overview from the Global Property Guide covers key aspects of Hong Kong's housing market and takes a closer look at its most recent developments and long-term trends.

Table of Contents

• Housing Market Snapshot
• Historic Perspective
• Demand Highlights
• Supply Highlights
• Rental Market
• Mortgage Market
• Socio-Economic Context

Housing Market Snapshot

Hong Kong's residential property price index fell further by 7.76% in Q1 2025 as compared to the same period last year, following year-on-year declines of 7.1% in Q4 2024, 12.52% in Q3, 12.9% in Q2, and 12.55% in Q1, according to data released by the Ratings and Valuation Department (RVD). It is now the thirteenth consecutive quarter of year-on-year price falls. When adjusted for inflation, residential property prices were down by 9.03% over the same period.

Quarter-on-quarter, the price index dropped by 1.73% (-2.09% inflation-adjusted) in Q1 2025.

Variations in price movements per property size and region:

• Apartments smaller than 40 sq. m: prices fell by 8.87% y-o-y in Q1 2025, to an average of HK$123,111 (US$15,725) per square meter (sqm). Quarter-on-quarter, prices were down by 4.99% during the last quarter.
• 40-69.9 sq. m. apartments: prices were down by 6.89% y-o-y to an average of HK$132,130 (US$16,877) per sqm in Q1 2025. They were also down by 6.71% from the previous quarter.
• 70-99.9 sq. m. apartments: prices dropped by 6.74% in Q1 2025 from the same period last year and by 2.89% from the previous quarter, to an average of HK$157,504 (US$20,118) per sqm.
• 100-159.9 sq. m. apartments: prices fell by a huge 10.31% y-o-y to an average of HK$185,503 (US$23,695) per sqm in Q1 2025. Quarterly, prices were down by a bigger 12.02%.
• Apartments with sizes bigger than 160 sq. m: prices increased by 7.18% y-o-y to HK$226,780 (US$28,967) per sqm in Q1 2025. Yet, quarter-on-quarter, prices were still down slightly by 1.67%.

Hong Kong's house price annual change:

Demand is now picking up, buoyed by stabilizing interest rates and the removal of housing market restrictions. In the primary market, the number of sales surged by 35.8% y-o-y to 3,897 units in Q1 2025 while sales value rose by 16.4% to HK$32.33 billion (US$4.13 billion). Similarly, in the secondary market, sales volume was up by 19.3% y-o-y to 8,296 units, and sales value increased by 14.4% to HK$56.24 billion (US$7.18 billion) in Q1 2025.

In line with recovering demand, residential construction activity is now increasing. Residential completions soared by 75.1% y-o-y to 24,261 in 2024, a sharp improvement from an annual decline of 34.6% in 2023, according to figures released by RVD. Then, in the first quarter of 2025, there were 5,486 dwelling units completed in Hong Kong. About 62% of these are properties with an area of 40 sqm and below.

Despite this, Hong Kong continues to suffer a chronic housing shortage - a problem that has dragged on for over two decades.

From 2008 to 2013, Hong Kong's dwelling prices skyrocketed by 134% (95.7% inflation-adjusted), driven by a flood of money in the wake of the global financial crisis.

The market slowed in the first half of 2014, but bounced back in the second half, with prices rising by 13.6% in Q4 2014, 19.6% in Q1 2015, 20.4% in Q2 2015, and 15% in Q3 2015.

After a brief housing market slowdown, house prices surged again by 41.5% (35.5% inflation-adjusted) from H2 2016 to H1 2018.

The housing market slowed from the end of 2018 until the first half of 2019 due to macro uncertainties and social unrest. After a short-lived recovery in the second half of 2019, the housing market struggled again in 2020 due to pandemic-related travel restrictions and lockdown measures imposed worldwide. Then in 2022, things got worse, with house prices plunging by 15% (-16.7 inflation-adjusted), following a modest increase of 3.7% in 2021 and a meager growth of 0.2% in 2020.

The housing market remained depressed in the succeeding two years, with house prices falling further by 7% (-9.2% inflation-adjusted) in 2023 and by another 7.1% (-8.4% inflation-adjusted) in 2024.

Overall, Hong Kong's service-oriented economy grew by a modest 2.5% in 2024 from a year earlier, following an expansion of 3.2% in 2023 and a contraction of 3.7% in 2022. To boost economic activity, the HK government unveiled a number of measures in the past two years, including offering cash handouts to residents, cutting the salaries tax, and attracting more workers and foreign investments.

Then in the first quarter of 2025, the HK economy recorded a real GDP growth rate of 3.1% year-on-year, following annual growth of 2.5% in Q4 2024, 1.9% in Q3, 3% in Q2, and 2.8% in Q1, according to data released by the government. It is now the ninth consecutive quarter of year-on-year growth. On a seasonally adjusted quarter-on-quarter basis, real GDP expanded by 1.9%, marking its fastest growth in two years and an acceleration from the prior quarter's 0.9% gain.

Overall, the government forecasts the HK economy to grow by around 2% to 3% this year.

Historic Perspective:

Hong Kong remains the world's most unaffordable property market, but bubble risks declined sharply

Hong Kong's housing boom in the past decades has been propelled by a combination of stringent government regulations on development, low interest rates, and currency stability, while the supply of land, which the government controls, continues to diminish.

Hong Kong's currency peg to the dollar kept borrowing costs near record lows, fueling continued property demand.

Despite improved affordability because of the recent decline in house prices, Hong Kong's property market remains the world's most unaffordable for the twelfth year in a row, according to the Demographia International Housing Affordability Survey 2024. Average home prices were 16.7 times the gross annual median household income, down from 18.8 times in 2022 and 20.7 times two years ago. In fact, it is now at its lowest level since 2016.

"Hong Kong is the least affordable market in Demographia International Housing Affordability, with a median multiple of 16.7, and the only market covered in China," said the Demographia report. "This is an improvement from the pre-pandemic 20.8 in 2019, the result of declining house prices and improved incomes. Hong Kong has had the least affordable housing in each of the 13 years of coverage by Demographia."

Similarly, in Mercer's 2024 Cost of Living Survey, Hong Kong was ranked as the world's most expensive city for expatriates to live in, followed by Singapore, Zurich, and Geneva.

However, according to the 2024 UBS Global Real Estate Bubble Index, Hong Kong is now down to the moderate bubble-risk territory because of the recent sharp house price declines.

"In the last four quarters, real housing prices in Hong Kong recorded a double-digit decline. In inflation-adjusted terms, house prices are back at levels last seen in 2012. The number of transactions fell sharply, and mortgage growth came to a standstill in the last four quarters," said the UBS report.

"High interest rates, anemic population growth, and a lack of buyer optimism all contributed to weak housing demand. However, residential rents and household incomes posted moderate gains in the previous year, contributing to lower imbalances. Bubble risk declined sharply in the last four quarters, and the city is now only in moderate bubble-risk territory," added UBS.

Demand Highlights:

Property demand recovering

During 2024, the total number of property transactions - including primary and secondary sales - rose strongly by 23.5% y-o-y to 53,099 units, in contrast to annual declines of 4.5% in 2023 and 39.4% in 2022, based on figures released by RVD. Likewise, total sales volume increased by 16.7% y-o-y to HK$454.36 billion (US$58.04 billion) last year, a sharp turnaround from annual contractions of 4.5% in 2023 and 44.4% in 2022.

As a result of the government lifting all market cooling measures earlier last year, Mainland Chinese homebuyers flocked to the Hong Kong property market in recent months, driving transaction levels to increase again.

Though there were wide variations in sales movements in the primary and secondary markets last year:

• Primary market property sales were up strongly by 57.3% y-o-y to 16,912 units in 2024, following a modest growth of 4.2% in 2023 and a huge contraction of 41.6% in 2022, based on data from RVD. Likewise, total transaction values increased by a huge 51.3% to HK$193.08 billion (US$24.66 billion), following annual growth of 16.3% last year and a huge fall of 52.5% two years ago.
• Secondary market property sales were up by 12.2% y-o-y to 36,187 units in 2024, an improvement from annual declines of 7.2% in 2023 and 38.7% in 2022. On the other hand, transaction values were still down slightly by 0.1% y-o-y to HK$261.28 billion (US$33.37 billion), following annual falls of 12.2% in 2023 and 40.8% two years ago.

This is in line with the recent figures released by the Land Registry, which showed that a total of 67,979 properties changed hands in 2024, up strongly by 17.1% compared to the preceding year. This was in contrast to a 2.7% decline in 2023. Similarly, the total value of property transactions increased by 11.8% y-o-y to HK$534.14 billion (US$68.23 billion) over the same period, an improvement from an annual decline of 13.8% in 2023.

Early figures in 2025 show that property demand continues to recover. In the primary market, the number of sales surged by 35.8% y-o-y to 3,897 units in Q1 2025 while sales value rose by 16.4% to HK$32.33 billion (US$4.13 billion). Similarly, in the secondary market, sales volume was up by 19.3% y-o-y to 8,296 units, and sales value increased by 14.4% to HK$56.24 billion (US$7.18 billion) in Q1 2025.

Stamp Duty (Amendment) Bill enacted, property market curbs scrapped

In May 2025, the Stamp Duty (Amendment) Bill 2025 was enacted, which effectively increases the maximum property value subject to stamp duty of HK$100 (US$13) from HK$3 million (US$383,199) to HK$4 million (US$510,932). This change, part of the 2025-26 Budget, helps make buying lower-value properties easier. The adjustment applies to transactions executed on or after February 26, 2025.

"Based on property transaction data of 2024-25, we estimate that the measure will benefit approximately 15 per cent of property transactions, with government revenue reduced by about $400 million annually," said a government spokesperson.

Earlier, Hong Kong removed all extra stamp duties in February 2024 to revive the struggling housing market, following pressure to lift long-standing housing market cooling measures, according to finance chief Paul Chan.

The decade-old property cooling measures have been lifted, including the Buyer's Stamp Duty targeting non-permanent residents, the New Residential Stamp Duty for second-time buyers, and the Special Stamp Duty aimed at homeowners who sold their property within two years.

"After prudent consideration of the overall current situation, we decide to cancel all demand side management measures for residential properties with immediate effect, that is, no Special Stamp Duty, Buyer's Stamp Duty, or New Residential Stamp Duty needs to be paid for any residential property transactions starting from today," said Chan. "We consider that the relevant measures are no longer necessary amidst the current economic and market conditions."

In October 2023, Chief Executive John Lee announced a partial easing of extra stamp duties - the first time that the property cooling measures were relaxed in over a decade. Among the property market curbs relaxed:

• The Buyer's Stamp Duty (BSD) and the New Residential Stamp Duty (NRSD) were halved from 15% to 7.5%.
• The Special Stamp Duty (SSD) - equivalent to 10% of the property price - that was previously imposed on transactions involving property held for less than three years will now only apply to transactions for property held for less than two years.
• All stamp duties on property purchases by newly-arrived foreign talents in Hong Kong are suspended, but it is subject to the new residents obtaining permanent residency.
• Stamp duties paid by second-home buyers and non-locals were also halved from a maximum of 30% to 15%.

Also in September 2022, the Hong Kong Monetary Authority (HKMA) relaxed its stress-test requirements for new mortgage borrowers by 100 basis points, effectively making the test easier to pass. The recent move came amidst falling property demand, after homebuyers saw their purchasing power fall by HK$1 million (US$128,000) since January 2022, following increases in both HIBOR and banks' prime rates.

Several rounds of market-cooling measures

Before the recent relaxation of property curbs, the HK government implemented several rounds of housing market-cooling measures in the past years to reduce speculative buying and regulate house price growth.

To discourage developers from hoarding, in June 2018, Carrie Lam introduced a vacancy tax on unsold homes that are not leased or have remained unoccupied six months after receiving an occupation permit. The tax rate is two times the rental income or 5% of the home's value.

Aside from the tax, the government also allocated nine plots of land, including three in the prime Kai Tak district, for public housing.

In addition, the Hong Kong Monetary Authority (HKMA) imposed new restrictions on bank lending to property developers in May 2017, restricting loans to property developers to a maximum of 40% of a site's value, replacing the earlier limit of 50%. Also, the number of loans allowed for residential property with a value less than HK$10 million (US$1.28 million) was reduced from 60% to 50%, and those with a value exceeding HK$10 million (US$1.28 million) were also cut from 50% to 40%.

In addition, a 30-person Land Supply Task Force was set up to consider long-term solutions to Hong Kong's housing crisis, given the outcry about 'coffin homes'.

In recent years, Hong Kong's government has leaned against property price rises:

• In November 2010, the government imposed a 'flip tax' of 15% on properties resold within six months (though in May 2014 the rule was somewhat relaxed), and doubled stamp duties to 8.5% on properties worth HK$20 million (US$2.55 million) or more.
• On October 26, 2012, the government imposed a 15% extra tax on property purchases made by foreigners.
• In February 2013, the government doubled the stamp duty on all property transactions worth more than HK$2 million (US$255,466), though again, this measure ended in May 2014.
• In April 2013, the Residential Properties (First-hand Sales) Ordinance to shield buyers from dishonest sales practices came into full effect.
• In February 2015, the government required buyers of self-used residential properties valued under HK$7 million (US$894,131) to make larger down payments.
• In November 2016, the government raised stamp duties for all property transactions to 15%, except for first-time homebuyers who are charged just 4.25%. However, house price rises continued to accelerate, amidst a surge in the number of multiple home purchases on one single transaction as investors take advantage of lower tax rates.
• To close the loophole, the government also announced that first-time homebuyers acquiring more than one property in a single contract will be charged the same 15% stamp duty that applies to purchases of a second property starting April 2017.

Supply Highlights:

Residential construction activity increasing

Residential completions soared by 75.1% y-o-y to 24,261 in 2024, a sharp improvement from an annual decline of 34.6% in 2023, according to figures released by RVD.

The New Territories and Kowloon accounted for 48% and 45% of the total completions, respectively. The remaining 7% were from Hong Kong Island. More specifically, the largest share came from Kowloon City at 33%, followed by Yuen Long and Tuen Mun at 17% each.

By property class:

• Class A completions (properties with an area of 40 sqm and below) surged by 38.3% y-o-y to 10,794 units, following a contraction of 21% in the preceding year.
• Class B completions (40 to 69.9 sqm) rose by a whopping 129.4% y-o-y to 10,705 units last year, in contrast to an annual fall of 39.1% in 2023.
• Class C completions (70 to 99.9 sqm) increased by 21.1% y-o-y to 1,284 units last year, in stark contrast to the 48.2% fall recorded in 2022.
• Class D completions (100 to 159.9 sqm) increased by nearly six times from 157 units to 913 units in 2024, a sharp turnaround from an annual decline of 85.1% in the prior year.
• Class E completions (160 sqm and above) rose by about 3.5 times from 162 units a year earlier to 565 units in 2024, in contrast to a decline of 68.9% in 2023.

Then, in the first quarter of 2025, there were 5,486 dwelling units completed in Hong Kong. About 62% of these are properties with an area of 40 sq. m. and below.

The stock of flats in Hong Kong totaled 3,005,000 units in 2024, up by 6.5% from 2,821,000 units in 2019, according to the Housing in Figures 2024 report released by the Housing Bureau. Of these, 1,311,000 units are public permanent housing, while the remaining 1,695,000 units are private housing.

How to solve Hong Kong's chronic housing shortage?

Increasing supply is the key. "We are looking at a shortfall of at least 1,200 hectares of land to meet our future supply and demand, and this is not taking into account extra land needed to improve the living space of each individual," said Task Force on Land Supply chairman Stanley Wong Yuen-fai.

The government recently unveiled Hong Kong's first major reclamation project since 2003, at an estimated cost of HK$20.5 billion (US$2.62 billion). Scheduled for completion by 2030, it will reclaim 130 hectares off northern Lantau and extend Tung Chung's new town to provide 49,000 flats for 144,000 people, plus 870,000 sqm of commercial floor area.

"It will greatly help solve the current shortage of housing," said Financial Secretary Paul Chan. Besides this, the government's 10-year housing strategy aims to provide land for 28,000 public flats annually, alongside 18,000 private homes.

Following Chinese President Xi Jinping's call on Hong Kong to provide "more decent" homes for the poor, the HK government has recently unveiled a HK$26.4 billion (US$3.37 billion) light housing project that plans to build about 30,000 temporary apartments over the next five years. This will give people an option to move out of cramped quarters, like the city's infamous "coffin homes", while waiting for public housing. However, the new scheme has faced public backlash because of its high cost and since it is seen as merely a band-aid solution to the city's festering housing crisis.

In October 2024, the government released its Long Term Housing Strategy Annual Progress Report 2024, setting its 10-year supply target at 440,000 units. This goal includes a target of 308,000 units for public housing and 132,000 units for private housing. At the same time, the Housing Bureau will propose three key areas for improvement:

1. Maintain a supply-led approach with flexibility to enhance housing availability.
2. Strengthen the housing ladder to encourage homeownership among young people.
3. Ensure the efficient use of public rental housing (PRH) resources and encourage PRH tenants to progress on the housing ladder.

Some development projects are also underway that could dramatically increase the city's housing stock.

"Two major projects could add substantially to Hong Kong's housing stock. The "Northern Metropolis," virtually adjacent to neighboring Shenzhen, would add more than 900,000 new housing units over the next two decades, with a target of more than 40% to be completed by 2032," said the Demographia International Housing Affordability 2024 report. "Another project, Lantau Vision Tomorrow, would add more than 200,000 new housing units on reclaimed islands near Hong Kong International Airport. This significant addition of housing units could moderate Hong Kong's still-high housing costs."

The total housing stock stood at 1,291,956 units in 2024, up by only 1.7% from the previous year, according to the RVD.

By property class:

• Class A (properties with an area of 40 sqm and below): 419,027 units, up by 2.4% from a year earlier
• Class B (40 to 69.9 sqm): 617,894 units, up by 1.6% from a year ago
• Class C (70 to 99.9 sqm): 155,088 units, up by a meager 0.6% y-o-y
• Class D (100 to 159.9 sqm): 70,982 units, up by 1.4% from a year ago
• Class E (160 sq. m. and above): 28,965 units, up by 1.6% from the previous year

Rental Market:

Rental yields gradually increasing, but still low by international standards

Hong Kong's rent price index:

While Hong Kong's rental yields are gradually rising, they remain extremely low by international standards, which can be attributed to the surge in property prices in the past decade. Hong Kong is not a 'typical' market. It is a place where the rich choose to park assets in the form of apartments, as part of a diversified asset-safeguard strategy, like Monaco and Singapore. Such markets typically have lower rental yields than more 'normal' housing markets.

Rental yields in Hong Kong in March 2025:

• Property Class A (properties with an area of 40 sq. m. and below) rental yields were 3.7%, up from 3.3% a year ago and 2.7% two years earlier, according to figures from RVD.
• Property Class B (40 to 69.9 sq. m.) rental yields stood at 3.2%, up from 2.8% in the previous year and 2.3% two years ago.
• Property Class C (70 to 99.9 sq. m.) rental yields averaged 2.8%, higher than the 2.5% a year earlier and 2.1% two years ago.
• Property Class D (100 to 159.9 sq. m.) rental yields averaged 2.6%, up from 2.4% in March 2024 and 2.1% in March 2023.
• Property Class E (160 sq. m. and above) rental yields were 2.4%, up from 2.2% a year earlier and 1.9% two years ago.

This is supported by the recent research conducted by the Global Property Guide, which showed that the average gross rental yields in Hong Kong stood at 3.88% in Q4 2024, up from 3.52% in Q3 2024, 3.54% in Q2 2024, and 3.39% in Q1 2024.

By major areas:

• In New Territories, gross rental yields for apartments ranged from 2.35% to 4.54% in Q4 2024, with a city average of 3.59%.
• In Kowloon, apartments offer rental yields between 2.4% and 4.99%, with a city average of 3.9%.
• In Hong Kong Island, gross rental yields ranged from 3.65% to 4.18%, with an average of 3.9%.
• In the Outlying Islands, rental yields ranged from 3.83% to 4.51%, with a city average of 4.13%.

Residential rental rates movements

Rental rates in Hong Kong are on the rise overall, though the pace of growth differs significantly depending on the property's location and size.

In Q1 2025:

• Rents for apartments smaller than 40 sqm were up by 3.5% from a year earlier, to an average of HK$ 469 (US$ 60) per sqm per month.
• Rents for 40-69.9 sqm apartments rose by 3.9% y-o-y, to an average of HK$ 397 (US$ 51) per sqm per month.
• Rents for 70-99.9 sqm apartments rose by 6.7% y-o-y, to an average of HK$ 446 (US$ 57) per sqm per month.
• Rents for 100-159.9 sqm apartments increased strongly by 9.1% y-o-y, to an average of HK$ 442 (US$ 57) per sqm per month.
• Rents for apartments larger than 160 sqm were up by 4.6% y-o-y, to reach an average of HK$ 459 (US$59) per sqm per month.

Mortgage Market:

Interest rates remained steady

In its May 2025 meeting, the HKMA kept its base rate unchanged at 4.75%, following the U.S. Federal Reserve's decision to hold its target range for the federal funds rate unchanged at 4.25% to 4.50% for the third consecutive meeting.

The HKMA moves in lockstep with the Fed, giving the local currency's peg to the US dollar.

"In Hong Kong, the monetary and financial markets have continued to operate in an orderly manner. The recent strengthening of the Hong Kong dollar, mainly driven by equity-related demands and the appreciation of regional currencies against the US dollar, has triggered the strong-side Convertibility Undertaking (CU) of HK$7.75 to US$1 under the Linked Exchange Rate System (LERS), said the HKMA.

"The markets are expected to focus on developments relating to US tariff measures and the US interest rate path, both of which are subject to considerable uncertainty. Global financial markets would inevitably be affected and exhibit volatility. The public should carefully assess and manage risks when making property purchase, investment, or borrowing decisions. The HKMA will continue to closely monitor market developments and maintain monetary and financial stability," added the HKMA.

Hong Kong's currency has been pegged at around HK$7.8 per U.S. dollar since October 1983, so when the US Federal Reserve interest rates move, so do Hong Kong's interest rates.

Prior to this, the base rate was cut three times from September to December 2024, after it was kept unchanged at 5.75% from July 2023 to August 2024, as inflationary pressures eased.

As such, major banks' best lending rates have started to decline in Hong Kong in the last quarter of last year. In May 2025, HSBC Holdings PLC announced that its best lending rate remains unchanged at 5.25%. The bank's best lending rate was last changed in December 2024, when it was slashed by 12.5 basis points.

Standard Chartered also maintained its Hong Kong dollar best lending rate at 5.5%. Bank of China (Hong Kong) kept its Hong Kong dollar prime rate steady at 5.25%. Other major lenders, including Hang Seng Bank, Bank of East Asia, and ICBC (Asia), followed suit, keeping their rates steady as well.

Fixed-rate mortgage scheme converted from pilot to permanent program

At the height of the Covid-19 pandemic, the Hong Kong Mortgage Corporation Limited (HKMC) introduced a pilot scheme for fixed-rate mortgages for 10, 15, and 20 years to reduce homebuyers' risks from interest rate volatility, thereby improving the banking sector's long-run stability. The maximum loan amount for residential mortgages under the scheme is HK$10 million (US$1.28 million). At the end of the fixed-rate period, the borrower has the option to re-fix the mortgage rate or convert it to a floating-rate loan.

In October 2021, HKMC announced that the scheme would be converted from a pilot program into a permanent offering starting from November 1, 2021.

"Proposed in the 2020-21 Budget, the Fixed-rate Mortgage Scheme has approved loans totaling around HK$400 million in the past year and a half. This reflects a certain market demand for fixed-rate mortgage products," said Financial Secretary Paul Chan. "The scheme has filled a market gap, and its permanent offer will continue to provide an alternative financing option to homebuyers for mitigating their risks arising from interest rate volatility, thereby enhancing banking stability in the long run."

The fixed interest rates per annum under the scheme, which was maintained until January 2022, were as follows:

After that, the new rates are announced monthly. Currently, the new fixed interest rates are as follows, based on the HKMC website:

• For 10-year mortgage loans: 4.74%
• For 15-year mortgage loans: 4.89%
• For 20-year mortgage loans: 5.04%

The application period is from September 26, 2024, until further notice. The drawdown period is within two months upon receipt of the application by the bank.

New mortgage lending rising again

New residential mortgage loans approved rose sharply by 22.7% to 5,361 in March 2025 as compared to 4,369 in the same period last year, according to HKMA figures. Likewise, the value of newly approved residential mortgage loans soared by 29.5% y-o-y to HK$24.67 billion (US$3.15 billion) in March 2025.

The secondary market accounted for about a 50.3% share of all new mortgage loans approved during the period. The primary market and refinancing accounted for 37.6% and 12.2%, respectively.

As such, the value of mortgage loans outstanding increased by 1.3% to HK$ 1.88 trillion (US$239.75 billion) in March 2025 from a year earlier, following growth of 0.8% in 2024, 2.5% in 2023, 4.2% in 2022, 9.8% in 2021, 7.8% in 2020, and 9.8% in 2019, based on figures from the HKMA.

The average loan-to-value (LTV) ratio of newly approved loans stood at 63.3% in March 2025, slightly up from 63.2% in the previous month and far higher than the 60.1% recorded a year earlier.

Over the same period, the mortgage delinquency ratio remained low at about 0.08% to 0.13%, while the rescheduled loan ratio was unchanged at 0.00%.

Though relative to GDP, the size of the mortgage market continues to shrink. This suggests that the economy is expanding at a faster pace than the mortgage sector. During 2024, the mortgage market was equivalent to about 58.9% of GDP, down from around 62.2% in 2023 and 64.4% in 2022 but still far higher than the 43.6% a decade ago.

Socio-Economic Context:

Modest economic growth

Hong Kong's service-oriented economy grew by a modest 2.5% in 2024 from a year earlier, following an expansion of 3.2% in 2023 and a contraction of 3.7% in 2022. To boost economic activity, the HK government unveiled a number of measures in the past two years, including offering cash handouts to residents, cutting the salaries tax, and attracting more workers and foreign investments.

Then in the first quarter of 2025, the HK economy recorded a real GDP growth rate of 3.1% year-on-year, following annual growth of 2.5% in Q4 2024, 1.9% in Q3, 3% in Q2, and 2.8% in Q1, according to data released by the government. It is now the ninth consecutive quarter of year-on-year growth. On a seasonally adjusted quarter-on-quarter basis, real GDP expanded by 1.9%, marking its fastest growth in two years and an acceleration from the prior quarter's 0.9% gain.

"The Hong Kong economy expanded solidly in the first quarter of 2025, mainly supported by visible increases in exports of goods and services, as well as the resumption of moderate growth in overall investment expenditure. Yet, private consumption expenditure continued to register a modest decline," said the HK government.

"The sustained steady growth of the Mainland economy amid more proactive fiscal policies and the moderately accommodative monetary policies should bode well for the performance of merchandise exports in Asia, including Hong Kong. Sustained international trade flows, coupled with improving inbound tourism, are also expected to benefit Hong Kong's exports of services. However, uncertainties in the trade policies of the United States persist, and its monetary policy trajectory going forward is still complicated," noted the government report.

Overall, the government forecasts that the HK economy will grow by around 2% to 3% this year.

In March 2025, the value of exports of goods increased strongly by 18.5% y-o-y to HK$455.5 billion (US$58.16 billion) while goods imports were up by 16.6% over a year earlier to HK$500.9 billion (US$63.96 billion), resulting to a trade deficit of HK$45.4 billion (US$5.8 billion). For the first quarter of 2025, the total value of exports of goods rose by 10.9% compared to the same period last year, while goods imports were up by 9.8%. This resulted in a trade deficit of HK$80.7 billion (US$10.3 billion), equivalent to 6.4% of the value of imports of goods in Q1 2025.

The HK economy suffered greatly for most of 2019 from social unrest as well as the US-China trade tensions, and for the whole year of 2020 from the COVID-19 pandemic. In 2020, real GDP contracted by about 6.5% from a year earlier, following a decline of 1.7% in 2019. When the first COVID-19 case was detected in January 2020, the HK government immediately rolled out social distancing measures and travel restrictions, putting further strain on the already ailing economy.

Prior to these, the HK economy had been growing by an annual average of 3.8% from 2000 to 2018.

Inflation seems to be gradually increasing again. In April 2025, overall inflation stood at 2%, up from 1.4% in the previous month and 1.1% a year earlier, according to the Census and Statistics Department. The increase was primarily driven by a lower ceiling on rate concessions, coupled with faster price increases in housing, transport, miscellaneous services, and food.

Despite this, the HK government expects inflation to remain manageable, projecting that underlying and headline consumer price inflation for 2025 will hover around 1.5% and 1.8%, respectively.

Hong Kong's inflation rate averaged 3.3% from 2010 to 2019 before slowing sharply to 0.25% in 2020. Then inflation rose again to 1.6% in 2021, 1.9% in 2022, and 2.1% in 2023. Inflation eased to 1.7% in 2024.

The labor market is weakening. In the three months ending April 2025, the seasonally-adjusted unemployment rate edged higher to 3.4%, from 3.2% in the previous period and 3% in the same period last year, based on figures from the Census and Statistics Department. It is now the highest level recorded in over two years.

The total number of unemployed persons reached 124,900 in the February-April 2025 period, up by around 6,600 from the previous month and the highest level seen since November 2022.

Tourism sector continues to recover

Tourism continues to recover. During 2024, the total number of visitor arrivals in Hong Kong reached 44.5 million people, up by a huge 30.9% from the prior year, according to figures from the Hong Kong Tourism Board (HKTB). Around 76.5% of the total arrivals came from Mainland China.

Despite the recent surge, the figures remained about 32% lower compared to the record-high 65.1 million arrivals registered in 2018.

In the first quarter of 2025, visitor arrivals rose further by 8.9% to 12.2 million people as compared to the same period last year. Visitors from Mainland China, who accounted for 75.6% of total arrivals in Q1, increased by 6.3% y-o-y to more than 9.2 million.

In March 2025, the average hotel room occupancy rate stood at 89%, an improvement from 85% in the previous month and from 84% in the same period last year, according to the Culture, Sports and Tourism Bureau.

Tourist arrivals averaged about 56 million people annually from 2011 to 2019. However, tourism became almost nonexistent in the following three years due to pandemic-related travel restrictions. Arrivals dropped to 3.57 million people in 2020, and then to just 91,398 people in 2021 and 604,564 people in 2022. In 2023, the tourism sector showed considerable improvements, registering visitor arrivals of 34 million people.

Sources:

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• Demographia International Housing Affordability 2024 Edition (Chapman University): https://www.demographia.com/
• Cost of Living City Ranking 2024 (Mercer): https://www.mercer.com/
• Global Real Estate Bubble Index 2024 (UBS): https://www.ubs.com/
• Monthly Statistical Bulletin (May 2025 - Issue No. 369) (Hong Kong Monetary Authority): https://www.hkma.gov.hk/
• Statistics of Property Transactions in Land Registry - 2024 (Hong Kong Property): https://en.hkp.com.hk/
• Hong Kong Budget 2024: Extra stamp duties axed in bid to revive housing market (Hong Kong Free Press): https://hongkongfp.com/
• Hong Kong home prices fall to 9-year low as trade war dims outlook (Mingtiandi): https://www.mingtiandi.com/
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• Scrapping Hong Kong property curbs will not lead to an overheated market or encourage speculation, government says (South China Morning Post): https://www.scmp.com/
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• How Hong Kong homebuyers have seen their purchasing power shrink by HK$1 million since January (South China Morning Post): https://www.scmp.com/
• Government welcomes passage of Stamp Duty (Amendment) Bill 2025 (GovHK): https://www.info.gov.hk/
• Housing in Figures 2024 (Housing Bureau): https://www.hb.gov.hk/
• Hong Kong Steps Up Efforts to Fix Housing Crisis After Xi Push (Bloomberg): https://www.bloomberg.com/
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• HKMA's Response to US Fed's Interest Rate Decision (Hong Kong Monetary Authority): https://www.hkma.gov.hk/
• Hong Kong Interest Rate (Trading Economics): https://tradingeconomics.com/
• HSBC maintains its best lending rate at 5.25 per cent in Hong Kong (HSBC): https://www.about.hsbc.com.hk/
• Hong Kong central bank keeps base rate unchanged as Fed holds steady (The Business Times): https://www.businesstimes.com.sg/
• Permanent Offer of Fixed-rate Mortgage Scheme (Hong Kong Monetary Authority): https://www.hkma.gov.hk/
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• Table 510-60001: Consumer Price Indices (October 2019 - September 2020 = 100) (Census and Statistics Department): https://www.censtatd.gov.hk/
• Table 650-80001: Visitor arrivals by nationality/region (Census and Statistics Department): https://www.censtatd.gov.hk/
• Hotel room occupancy rate (Data.gov.hk): https://data.gov.hk/