Hong Kong's overall home rental prices rose in June to the highest level in almost six years as potential buyers took a wait-and-see approach and demand from new arrivals and students boosted the rental market.

Figures released by the Rating and Valuation Department on Tuesday showed that the key gauge of overall rental prices stood at 195.6, 0.3 percent higher than that for May.

That was the highest level since September 2019 and also 1.6 percent higher year on year. However, the pace of the rental increase has slowed down.

Rents for units of almost all sizes headed north, though larger units – those measuring more than 1,722 square feet – saw bigger spikes.

The rises also came as home prices rose for a third consecutive month in June, thanks to relatively low interest rates as developers continued to sell existing stock due to high inventories.

The official home price index, a key gauge measuring the city's lived-in home prices, stood at 286.7 last month, 0.03 percent higher on a monthly basis, while narrowing the year-on-year decline to 5.2 percent.

Taking the first six months together, home prices retreated 0.9 percent year on year.

Eddie Kwok, executive director of valuation and advisory services at CBRE Hong Kong, said the relative stability in residential home prices came as persistent low interest rates led to the "resurfacing of positive carry", attracting buyers, especially purchase-to-lease investors.

An active push by developers to offload inventories to replenish capital also weighed on the overall residential prices as they lowered prices to remain competitive.

"Despite the increased market share of primary sales, such activities are not supporting the growth in residential prices," Kwok said.

"Looking ahead, we believe developers might reduce price cuts as more inventories are being sold, which will lend support to overall residential prices.

"Given the improvement in market sentiment, coupled with current low financing cost situation, we are optimistic that we are proceeding to a 'bottoming out'.

"This may also cap an end to the residential market correction that has been going on since 2021," he added.