According to a recent market outlook, the Chairman of Midland Group noted that Hong Kong's property market has performed significantly stronger than anticipated in the first half of the year. Both primary and secondary markets have seen increases in both transaction volume and value, with property prices showing a notable rebound, indicating a continued strengthening of the market's recovery momentum. Consequently, the full-year forecast for residential property transactions has been revised upwards. The projected number of primary transactions has been adjusted from an initial 22,000 to 23,000, while secondary transactions have been raised from 50,000 to 57,000. The annual property price increase is now estimated to reach approximately 15%, approaching the upper limit of the forecast range set at the beginning of the year.
It was stated that despite escalating geopolitical tensions externally, Hong Kong property prices have risen by about 9.29% so far this year. During this period, gains in gold prices have been erased, and the Hang Seng Index remains below its level at the end of last year. Among major investment sectors, residential property price increases stand out, suggesting that capital continues to flow into the residential market. In total, the first five months of the year saw nearly 10,700 primary transactions, with expectations that the first half could challenge 12,700 transactions, involving an amount potentially reaching HKD 150 billion. Both transaction count and value are poised to reach record highs since the implementation of the primary sales regulations.
The secondary market is also thriving, with an estimated 25,400 transactions in the first five months. It is projected that the first half could see 30,900 transactions, with a value of approximately HKD 220 billion, marking five-year highs in both volume and value.
Midland Group Chairman pointed out that the current market upswing is primarily driven by a combination of capital reallocation and genuine end-user demand. According to Hong Kong Monetary Authority figures, as of the end of April 2026, the total deposits of Hong Kong authorized institutions reached HKD 19.91 trillion, with total time deposits also hitting a new high of HKD 11.11 trillion. This sufficiently reflects ample market liquidity, providing support for the property market. With improved market sentiment, buyer confidence has significantly increased. Additionally, the accelerated pace of investment by investors and "new Hong Kong residents" has intensified market competition, prompting many local buyers to expedite their purchasing decisions in response to market changes, further driving sustained upward transaction performance.
It was further noted that another characteristic of the current property market is the relatively lagging performance of commercial, industrial, and shop (CIS) properties compared to the residential sector. Based on data from the Land Registry compiled by Midland IC&I Research, CIS registrations for the first five months of 2026 totaled 2,063, a 10.9% year-on-year increase. Although this represents a four-year high for the same period and prices are gradually finding support, the transaction growth rate is significantly lower than that of residential transactions during the same period, indicating a relatively slower recovery pace for the commercial property market.
He indicated that the performance of CIS properties, to some extent, reflects changes in Hong Kong's overall economic structure. Currently, active development in the financial sector is driving increased demand for premium office space in core business districts. Among the three major segments, the recovery pace of Central district offices is viewed relatively more favorably. Vacancy rates for Grade A commercial buildings in the area are gradually declining, with rental and sales prices having bottomed out, suggesting potential for future increases. In contrast, the Kowloon East office market is constrained by higher supply, and prices are expected to remain range-bound in the near term.