Hong Kong home prices rose in August for a third consecutive month to the highest level so far this year, leading an analyst to expect the recovery to continue following the latest interest rate cut by the US Federal Reserve.

Official data released by the Rating and Valuation Department on Friday showed that a widely watched official index of secondary home prices stood at 288.5 in August. That was 0.1 percent higher compared to the month before, although it was still 1.2 percent lower compared a year ago.

Taking the first eight months of the year as a whole, home prices declined 0.2 percent.

While prices for small and medium-sized units rose 0.1 percent on a monthly basis, those for larger units rose 0.2 percent. But larger units still saw more price drops on a yearly basis.

Commenting on the data, Eddie Kwok, executive director at valuation and advisory services at CBRE Hong Kong, says that the recent Policy Address did not introduce any relaxation measures for the mass market.

But he remained "cautiously optimistic" that the sector would eventually bottom out and see a steady recovery in transaction volumes next year.

The lowering of prime lending rates by 12.5 basis points last week by major local banks, which followed the Fed's reduction of its benchmark rate by 25 basis points, was a favourable factor, according to him.

"We believe the lower borrowing costs will bring more buyers to enter the Hong Kong residential property market, thus lending support to the residential property prices," Kwok said.

Another factor that will also boost sentiment in the property market, he added, is the boom in the local stock market that has seen continuous advances made by the benchmark Hang Seng Index.

The city's official rental index, meanwhile, rose for a ninth consecutive month and stood at 198.7 for August.

That was 1.1 percent higher on a monthly basis and 1.8 percent higher on the year.

Taking the first eight months of the year as a whole, home rents had risen by 3.2 percent.