Hong Kong home prices stayed flat in May following a rebound in April, leading analysts to believe the city's property prices are likely to stay stable following a recent decline in interest rates.

Data released by the Rating and Valuation Department on Thursday showed that the home price index stood at 286.9 in May, up by 0.04 percent from a month earlier but almost 6.2 percent lower from a year ago.

The index had risen by 0.35 percent on a monthly basis in April.

Prices for small, medium and large-sized units all edged higher in May.

For the first five months of the year taken as a whole, prices fell 0.9 percent from a year ago.

Eddie Kwok, executive director of valuation and advisory services at CBRE Hong Kong, said the "positive carry for residential properties has resurfaced" since the decline of the one-month Hong Kong interbank offered rate, which is linked to mortgage loans, last month.

"This trend is likely to remain unchanged in the next few months," he said.

"If interest rates can stay low, the residential property market will likely see a recovery as it may cost less to repay mortgages as compared to renting.

"And this is likely to attract buy-to-lease investors and end-users entering the residential property market eventually."

Kwok added that prices are bottoming out but dismissed the likelihood of a significant spike this year, saying cash-strapped developers will seize the opportunity to clear out their mounting inventories to replenish their capital.

He is sticking with his forecast that home prices will climb by up to 5 percent this year, which would put an end to the market correction since 2021.

The rental price index, meanwhile, headed north for the sixth consecutive month, reaching 195.2 in May.

That was 0.67 percent higher on a monthly basis and 2.7 percent higher year on year .

Rental prices rose by 1.4 percent in the first five months of 2025.