Goldman Sachs, JP Morgan Upgrade Hong Kong Housing Forecasts on Mainland Demand

JP Morgan and Goldman Sachs have both upgraded their forecasts for Hong Kong’s housing market, predicting double-digit price gains this year as fresh data bolster signs of a recovery.

With home prices in the city now having risen 10 percent since a recovery began in March last year, JP Morgan said in a note released Sunday that it now expects another 10 to 15 percent increase this year after earlier predicting a 5 to 7 percent upswing. 

“We believe the sector has now entered a new stage (from ‘early-stage recovery’ to ‘expansion’) in the real estate cycle,” said Karl Chan, head of Hong Kong property research at JP Morgan. “Following historical patterns, Hong Kong home prices could potentially see another over 30 percent growth from this point.”

The US banking giant’s optimism comes after Goldman Sachs’ research team said last week said that it expects home prices in Hong Kong to climb from 5 percent to 12 percent in a research note last week, with the US investment bank attributing the growth to  demand from migrants and non-local buyers, residents’ expected shift from renting to buying due to strong rental growth and lower mortgage rates, as well as growing investment demand.

Mainland Demand Grows

A fresh factor in the current rebound, compared to earlier recoveries, is the outsized role of mainland buyers, as Hong Kong gains favour as a “safe haven” for real estate investment in China, JP Morgan said. 

Hong Kong’s renaissance comes as home prices continue to drop in tier-one mainland cities like Beijing and Shenzhen, while overseas destinations like Singapore have fenced off their markets with taxes and other restrictions on purchases by foreign buyers. 

“This gives us a lot of room for imagination if demand from Mainland Chinese grows even stronger, particularly as all additional stamp duties have been lifted,” JP Morgan’s Chan said.

In 2025 Mainland Chinese buyers accounted for 49 percent of transaction value in the new home market and 21 percent in the second-hand segment, according to data cited by JP Morgan.

Also driving the city’s housing recovery is a resilient stock market, as well as more attractive home mortgages from local banks, the firm said.

Cautious on Office and Retail

While taking a bullish view on Hong Kong’s residential property segment, analysts led by Goldman Sachs managing director Simon Cheung, have a more cautious outlook on the city’s commercial real estate market. 

Goldman expects rents for office properties in Hong Kong’s traditional business hub in Central district to rise by an average of 3 percent this year, while leasing rates in other areas are likely to remain flat.

The bank’s analysts foresee a 2 uptick for retail rents as the city faces ongoing competition from other shopping destinations in Asia, pressure from e-commerce channels and diversion of local spending to Shenzhen.

The more optimistic forecasts from Goldman Sachs and JP Morgan come after Morgan Stanley last month upgraded Hong Kong’s property sector to “attractive,” upgraded Hong Kong’s property sector to “attractive” for this year.