Hong Kong Housing Market Expected to Stabilize by Late 2025

The Hong Kong housing market is forecasted to stabilize by late 2025, as economic adjustments and evolving property demand contribute to equilibrium. Experts anticipate a balanced market, with improvements driven by steadying prices and increased buyer-seller alignment. This marks a potential turning point for Hong Kong’s real estate sector, offering opportunities for investors and residents alike while reflecting broader recovery trends in the region's economy. Stability signals optimism for the housing market's future.

Hong Kong’s private housing market is beginning to stabilize as inventory levels gradually adjust to meet demand. Comparing the available supply of private housing - including pre-sale approved units and unsold completed project units - with primary transaction volumes over the past year, the months of supply dropped to 78.2 in October 2024, down from a high of 101.6 months. JLL’s latest Residential Market Monitor report predicts that new home inventories will likely achieve a more balanced state between supply and demand by late 2025.

The Housing Bureau projects that around 108,000 private residential units will become available over the next three to four years, reflecting only a 10% rise from peak 2021 levels. Analyzing the balance of supply and demand through monthly housing supply metrics, the months of inventory climbed from 54.4 in December 2021 to 95.4 in 2022, peaking at 101.6 in 2023. However, by September 2024, this figure had fallen to 78.2 months, indicating better market absorption rates.

Market Projections for 2025

Norry Lee, Senior Director of Projects Strategy and Consultancy at JLL Hong Kong, stated, "If primary market transaction volumes stabilize at 18,000 units annually - a slight increase of under 10% from projected 2024 figures - months of supply could decline further to 58.0 by December 2025, approaching the balanced levels seen in 2021." Despite higher inventory levels in completed and under-construction projects, forward-looking supply indicators show a different trend.

For instance, the number of potential units from sites ready for immediate construction fell to 10,000 in September 2024, the lowest since 2012 and a significant drop from 25,000 units in March 2023. This structural reduction in the supply pipeline may limit medium-term inventory growth, potentially easing pricing pressure on new projects.

Strategic Supply Adjustments

Developers are actively moderating housing supply by strategically managing their pipelines. These strategies include altering construction schedules, repurposing developments, and optimizing project launch timelines. For example, SHKP postponed its So Kwun Wat project, citing design modifications, while seven residential developments in 2024 allocated unsold units for leasing to manage supply. Such measures could accelerate the market’s return to healthier inventory levels, despite aggregate statistics suggesting otherwise.

Macroeconomic Outlook and Recovery Path

Cathie Chung, Senior Director of Research at JLL Hong Kong, noted, "Macroeconomic challenges affecting Hong Kong’s housing market are starting to ease, although geopolitical risks, such as potential US-China trade tensions, remain a concern." While the recovery path is complex, improving market fundamentals offer a basis for potential stabilization. The evolving balance of supply and demand, along with proactive adjustments by developers, indicates a slow but steady recovery in Hong Kong’s residential market as it adapts to changing conditions.

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Source: worldpropertyjournal‍