H
ong Kong's residential property market is poised for a rebound in 2025, driven by lower interest rates and the prospect of positive carry from mortgage investments. According to Morgan Stanley, home prices are expected to rise by 5% next year, marking the first annual increase in five years after a 25% correction.

    The key driver behind this uptick will be the decrease in US interest rates, which has already led to a reduction in Hong Kong's base rate and prime lending rates. The Hong Kong Monetary Authority lowered its base rate to 5%, while six major lenders trimmed their prime lending rates for the second time this year.

    As mortgage rates decline, they are expected to fall below residential rental yields by mid-2025, creating a positive carry that will fuel property price growth. This shift is already benefiting borrowers, with monthly payments on a HK$5 million loan decreasing by around HK$709 to HK$22,803, according to mReferral.