Business Insights | Hong Kong Residential Market Recovery Led by Secondary Properties

Hong Kong's residential market has continued the gradual recovery that began in the second half of 2025. Transaction activity in 2026 has improved noticeably compared with the previous year, although the recovery remains uneven across market segments. As of July 2026, secondary residential transactions reached 33,459 units, equivalent to 75.1% of the full-year total recorded in 2025. During the same period, primary residential transactions totaled 13,227 units, representing 63.1% of the 2025 full-year volume. On an annualized basis, both the primary and secondary markets are outperforming last year, but the secondary market is recovering at a faster pace and has become the key driver of the overall residential market rebound. 

Notably, this recovery is not being driven by the traditional mass-market segment. Instead, the strongest transaction growth has been recorded in the mid-priced and upper-mid-priced residential sectors, particularly properties valued between HK$10 million and HK$50 million. This trend reflects the gradual release of upgrader demand as well as renewed purchasing interest among higher-income households seeking improved living conditions. In contrast, the primary market below HK$5 million remains relatively weak. By July, transactions in this segment had achieved only 23.5% of the total volume recorded in 2025, highlighting a clear divergence from other price categories. 

Changing Transaction Structure: Mid-Priced Homes Take Centre Stage

The structure of the secondary market is evolving and is no longer solely dependent on lower-priced homes. While properties priced below HK$5 million still account for nearly half of all secondary residential transactions, their market share has gradually declined compared with last year. At the same time, homes priced between HK$5 million and HK$30 million have gained market share. This shift suggests that demand is expanding beyond first-time homebuyers and increasingly driven by households seeking better living space, improved quality of life, and stronger community amenities. 

The most notable momentum can be seen in the HK$10 million to HK$50 million segment. By July 2026, transactions in the HK$10 million to HK$30 million category had already reached 93.7% of the entire 2025 transaction volume, while the HK$30 million to HK$50 million category had achieved 98.8%. If current market activity continues, both segments are likely to surpass last year's transaction levels by year-end. This performance suggests that upgrader demand is returning to the market and that financially capable owner-occupiers are becoming increasingly confident about residential property prospects. 

Returning Upgrade Demand Provides a Key Source of Support

Upgrade demand has long been a critical component of Hong Kong's residential market. During weaker market conditions, potential upgraders often delay purchasing decisions in anticipation of further price corrections. However, as residential prices stabilize, interest-rate expectations become clearer, and signs of recovery emerge, pent-up demand typically returns.

The strong performance of the HK$10 million to HK$30 million segment reflects this trend. Many family buyers are reassessing their housing needs and seeking to move from smaller units into larger homes or higher-quality residential developments. At the same time, long-term homeowners are taking advantage of improving market conditions to accelerate upgrade plans and optimize both buying and selling opportunities. This wave of upgrader activity is supporting transaction growth within the mid-market segment and strengthening the broader residential market recovery. 

Investment Perspective

The HK$5 million to HK$10 million segment remains the most liquid section of the market. Properties within this price range benefit from deep rental demand and active resale activity, attracting a broad tenant base that includes young professionals, small families, and newly married couples. Compared with the luxury sector, these assets are generally better suited to investors seeking stable rental income and greater liquidity. 

Meanwhile, the HK$10 million to HK$30 million segment offers stronger potential for capital appreciation. Supported by ongoing upgrader demand, properties located in established residential districts or supply-constrained locations may continue to experience price growth over the medium term. Investors pursuing capital gains rather than purely rental yield may find selective opportunities within this market segment, provided asset selection remains disciplined. 

Outlook

Overall, the Hong Kong residential market has entered a more established phase of recovery in 2026, with mid-priced housing emerging as the principal driver of transaction growth. The secondary market continues to outperform the primary market, benefiting from greater availability of stock, transparent pricing, and increased flexibility for negotiation. At the same time, the return of upgrader demand is reshaping transaction patterns, gradually shifting market activity away from entry-level housing and towards higher-value residential properties. As confidence improves, the mid-market segment is expected to remain a key pillar supporting the next stage of the market recovery.