The latest data reveals a robust upward trend in Hong Kong's residential rental market. Government figures show that last month, the official private building rental index increased by 1.02% month-on-month, marking not only the third consecutive month of growth but also hitting a new high not seen in about 4 and a half years. Analysts attribute this to continued influx of professionals into Hong Kong, coupled with the peak rental season, suggesting that rental increases are likely to continue.

Meanwhile, in contrast, the private residential price index for May fell by 1.2% month-on-month, ending two consecutive months of increase following the cancellation of stamp duty concessions.

According to estimates, in May this year, the private residential rental index reached 189 points, the highest in about 4 and a half years since December 2019, with a cumulative increase of 2.5% over the past three months and 1.6% year-to-date. This marks the first time since September 2014 that the index has seen consecutive monthly increases exceeding 1%, highlighting strong momentum in rental price growth.

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Across different unit categories, all rental indices saw increases last month. Units classified as Class B, with practical areas ranging from 431 to 752 square feet, performed the best with a monthly increase of 1.5%, expanding by 0.2 percentage points from the previous month, and accumulating a 3% increase over three months to reach 188.5 points, also the highest in about 4 and a half years since December 2019. Additionally, Class C units with practical areas from 753 to 1,075 square feet saw a rental index increase of 1.1%, reaching 160.9 points, surpassing 160 points for the first time since December 2019.

Victor Tin, Vice Chairman and President of Residential Department, Asia Pacific at Midland Realty, noted that with ongoing influx of professionals into Hong Kong and increasing housing demand, coupled with the upcoming peak rental season, the momentum of rental price increases is expected to continue. Furthermore, with declining property prices, rental yields may potentially increase.

On the other hand, according to government estimates, the private residential price index fell by 1.2% month-on-month last month, dropping to 305.9 points, ending two consecutive months of upward trend. Compared to the 311.3 points at the end of last year, it has declined by 1.7% this year, and compared to the peak of 398.1 points in September 2021, it has dropped by 23.2%. Among different unit categories, Class E units with areas of 1,722 square feet or more experienced the largest decline, sharply dropping by 1.9% on a monthly basis.

Alan Wong, Senior Director and Head of Research and Consultancy, Greater China at Colliers, pointed out that market expectations for delayed interest rate cuts in the United States, coupled with a lack of other positive news, are likely to result in a 3% decline in property prices in the first half of the year, with an approximate 5% decline for the whole year.