A recovery in Hong Kong's property market, exhibited in upcoming land auctions, will test developers' financial discipline, S&P Global Ratings said in a Wednesday release.

Rated Hong Kong developers weathered the past property slowdown through reduced investments and stronger balance sheets, according to a Wednesday release.

Hong Kong could observe heightened bidding and land purchases at inflated prices under the property market's marked upcycles, although the recovery could be moderate this time, S&P credit analyst Oscar Chung said.

Residential prices have risen by about 10% after bottoming out in mid-2025, while volumes have rebounded to 20,540 primary home sales in 2025, S&P said.

S&P expects increased volumes in 2026 before moderating to 18,000 in 2027 amid sated demand.

The rating agency forecasts price increases between 3% and 5% for the rest of the year, with total appreciation coming to between 8% and 10% in 2026.

Price growth will likely be between 0% and 3% for 2027, the rating agency said.

Upside to the price appreciation forecast could be possible under rising investor flows, S&P said.