Hong Kong's home prices rose 3.3 percent in 2025 as a stock market boom, interest rate cuts, as well as government policies propped up the previously sluggish sector.

Official figures released by the Rating and Valuation Department on Wednesday also showed that the city's official home price index climbed for the seventh consecutive month to stand at 298.6 in December, up 0.2 percent from November.

The December figure also marked the highest level since June 2024, when the gauge stood at 302.5.

Commenting on the figures, Eddie Kwok, executive director of valuation and advisory services at CBRE Hong Kong, said the upward trend would continue in 2026, as more buyers entered the market and drove up the transaction volumes, signalling that prices have already bottomed out.

He noted that small-sized units saw the biggest price spikes last year, rising 4.1 percent, partly driven by government measures to cut stamp duties on units valued at HK$4 million or below.

He also said that the inventory of unsold new-homes started declining last year, as over 1,600 first-hand transactions were recorded each month since April.

"Looking ahead, when unsold inventory falls below 18,000 units, developers would be in a position to further scale back discounts, which will help stabilise prices and support the steady upward movement," he said.

Meanwhile, Alvin Leung, senior director of valuation and advisory services at Colliers, noted that the city's residential market has picked up notably since the middle of last year, supported by the stock market boom, interest rate cuts and government talent schemes.

"Attractive rental yields and the full removal of property cooling measures in the 2024 Policy Address further fuelled strong market sentiment," he said.

"Large-scale first-hand projects have been particularly appealing to investors, long-term family funds, and mainland buyers for both asset allocation and self-use," he added.

The property veteran also noted that many mainland buyers snapped up properties in areas such as Kai Tak, West Kowloon, and Mid-Levels, potentially giving more room for price increases in these districts.

Both Leung and Kwok forecast that residential prices would rise by another three to five percent this year.