UBS: Housing prices in Hong Kong are expected to rise 0% to 5% in 2025

The Zhitong Finance App learned that residential property prices in Hong Kong have been adjusted by 28% since 2018, mainly due to an increase in capitalization rates. However, the current rent level is about the same as in 2018. According to UBS Investment Bank Hong Kong real estate analyst Leung Chin Ka, Hong Kong property prices may begin to rise, driven by falling interest rates, limited supply, population inflows, and rising rents. Leung Chin Ka said that according to UBS's forecast, the compound annual growth rate of rents will reach 5% by 2030, and it is predicted that housing prices will rise by 0% to 5% in 2025.

UBS's positive view of the Hong Kong housing market has three key factors: first, the housing market is likely to improve after interest rate cuts; 1) strong residential demand growth; 2) possible release of HK$4 trillion time deposits; 3) Hong Kong's new mortgage interest rate is expected to fall from the current 3.9% to 2.9% by the end of 2025, which will support the market.

Second, strong population inflows will drive demand for housing. It is estimated that by 2030, the population of Hong Kong will exceed 8 million, mainly benefiting from a stronger influx of talents, families and students;

Third, there is a structural upward trend in residential rents. UBS's residential rent forecasting model shows that due to strong population growth and a gradual decline in the supply of new housing, the compound annual growth rate of residential rents will reach 5% between 2024-2030.