‘Difficult year’ ahead for Hong Kong developers as fading rate-cut hopes cloud outlook

Developers will rely on low prices to draw buyers as rising US inflation and Trump tariff threats make rate cuts unlikely, experts say

Reading Time:4 minutes

Residential buildings under construction, pictured from the Kai Tai Promenade on July 22, 2024. Photo: Sam Tsang

Published: 8:30am, 17 Feb 2025Updated: 9:23am, 17 Feb 2025

Hong Kong developers will continue to price their swollen inventory of new flats at discount prices to attract buyers in 2025 as hopes of lower interest rates fade and concerns grow about a liquidity crunch among builders.

“Expecting interest rate cuts to support the property market is unlikely for this year,” said Chau Kwong-wing, chair professor and director of the Ronald Coase Centre for Property Rights Research at Hong Kong University.

Hong Kong’s benchmark interest rate, which has moved in lockstep with US monetary policy since 1983, is likely to remain higher for longer, amid rising US inflation and US President Donald Trump’s expected spate of tariffs and protectionist policies.

Hong Kong’s mortgage rates hovered at a 23-year high until a downward cycle began in September, following 11 increases between March 2022 and July 2023. Rates fell in October and December.

The property market was counting on further rate cuts in 2025 to boost transactions, but that scenario now seems less likely.

Developers would have to launch projects at a “market-acceptable price” to sell new residential units under high interest rates, Chau said. Rents would continue to increase, but rental yield has not yet attracted investors to enter the market, he added.