In February 2025, Hong Kong's residential market reported a worrying decline in overall transactions, with a total of 3,200 sales recorded—an 11.7% drop month-on-month. This decrease highlights the ongoing struggle within the property sector as home prices continue to decline, with the price index hitting a low not seen in over eight years. According to the Rating and Valuation Department, the index fell by 0.45% in January, marking a staggering 28% drop from its record high in September 2021.

Despite the overall slump, there is a silver lining shown in the first-hand property sales, which experienced a notable resurgence, increasing by 17% to reach 900 transactions. This surge follows two consecutive months of downturn, signaling a possible shift in market sentiment. Analysts suggest that recent policy changes may be encouraging buyer interest, particularly among first-time buyers.

A highlight of the 2025-26 Budget was the adjustment of the eligibility threshold for homes subject to the HK$100 stamp duty, which was increased from HK$3 million to HK$4 million. This modification is expected to stimulate the primary market, with forecasts indicating a potential rise in residential transactions by 5% to 10%.

Noteworthy projects attracting buyer attention include Henderson’s Eight Southpark in Kowloon City and Sun Hung Kai Properties' Yoho West Parkside in Yuen Long, both of which feature units priced under HK$4 million (or under HK$10,000 per sq ft). These developments saw enthusiastic responses, with units selling out during their initial offerings thanks to substantial discounts.

Meanwhile, the luxury segment of the market has shown resilience. The Knightsbridge in Kai Tak, featuring larger units over 1,000 sq ft priced above HK$30 million, has enjoyed strong demand. Additionally, Mont Verra in Shek Kip Mei has successfully sold luxury mansions for prices exceeding HK$50,000 per sq ft this year. These indicators reinforce a sustained interest among affluent buyers, even as the broader market faces challenges.

Looking ahead, market observers are cautiously optimistic. Anticipated interest rate cuts later in 2025 and improvements in the Hang Seng Index could encourage more buyer activity, particularly as the primary market shows signs of renewed vitality. If this positive momentum continues, it is expected that home prices may find their bottom in the first half of 2025, potentially setting the stage for a robust recovery in the residential sector.

Stay tuned as the market continues to evolve—who knows what the subsequent months could unveil for prospective buyers and investors!