Where to start

The latest data from the Centaline Property Research Department shows the Centaline City Leading Index (CCL) fell 0.39% week-on-week to 159.92 points.

Why the index is stuck

This marks the first time in 21 weeks (over five months) since early March that seven out of eight property price indices declined while only one rose. Despite the weekly drop, the CCL remains the fourth-highest reading in 151 weeks (nearly three years) since early September 2023.

Escalating tensions between Iran and the United States have driven oil prices sharply higher, fueling concerns that the Federal Reserve may raise interest rates. Combined with a cumulative 10% increase in home prices so far this year, buyers have turned cautious and slowed their purchasing pace, causing the CCL to hover near the 160-point level for seven consecutive weeks.

Supporting factors

However, banks are increasing cash rebates on mortgages, and the recent rebound in the Hong Kong stock market has pushed the Hang Seng Index to a near two-month high. The U.S. decision to keep interest rates unchanged also provides support for property prices, though the market is expected to consolidate at elevated levels in the near term.

Outlook

The CCL's third-quarter target is to challenge 165 points (the level just before the release of the first price list for Yau Tong's "Prospect" project in early August 2023), currently 5.08 points or 3.18% away. Since interbank offered rates began declining in May 2025, home prices have reversed and bottomed out. Combined with two rate cuts by local banks last year, the CCL has climbed 18.32% from the 135.16-point low in May 2024, when the HIBOR-based mortgage rate again fell below the cap rate. The index is up 18.56% from the 134.89-point low before the 2025 March budget, up 17.71% from the 135.86-point low before the first rate cut in September 2024, and down 16.42% from the historical peak of 191.34 points in August 2021.