Rents in Hong Kong hit a five-and-a-half-year high in February amid an increase in demand after a lull during the holiday season, according to Centaline Property Agency, which expects rents to continue rising as economic uncertainty discourages more people from buying homes.
Centaline’s widely followed Centa-City Rental Index, published on Monday, rose 0.46 per cent month on month to 123.97, bringing the overall increase in the first two months of the year to 0.65 per cent.
It was the highest level since 125.70 in September 2019 and it also crossed last year’s high of 123.94 in August, the data showed.
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The current levels “indicate that the traditional rental market slowdown from Christmas to Lunar New Year has ended, and market sentiment has improved”, said Yeung Ming-yee, a senior associate director at Centaline. “Strong housing demand, combined with a shortage of rental listings, could gradually push rents higher.”
Yeung said that the third quarter, which coincides with the start of the new college academic year, was typically the peak season for rentals. The index was likely to challenge the all-time high of 128.01 recorded in August 2018, he added.
Rents in Kowloon jumped 1.84 per cent month on month in February, the most in eight months and hit the highest level in nearly five and a half years. In New Territories West, rents rose 0.43 per cent to match the highest level seen in September 2018.
Despite improvements on the rental front, Hong Kong’s property market is still struggling to recover from a multi-year decline, weighed down by high interest rates and economic uncertainty.
Private residential properties in the city lost US$61.7 billion in value in the 12 months to February, while lived-in home prices in January fell to their lowest level in more than eight years.
Lived-in home prices fell in December to cap three straight years of setbacks, according to data published by the Rating and Valuation Department. Prices weakened 7.13 per cent last year, following a 15 per cent drop in 2023
To support the ailing sector, Financial Secretary Paul Chan Mo-po adjusted the stamp duty on mass-market homes in the latest budget. The rate has been reduced to HK$100 (US$12.90) from HK$60,000 for homes worth up to HK$4 million, instead of HK$3 million previously.
The property market is banking on further interest rate cuts, which move in lockstep with the US Federal Reserve, to spur a revival. However, this is becoming increasingly unlikely amid rising US inflation and protectionist tariff hikes under President Donald Trump.
The Hong Kong Monetary Authority, the city’s de facto central bank, maintained its base rate at 4.75 per cent in January, taking a breather after three cuts last year.
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