LP.com

Last month, Hong Kong's housing market experienced another rise in residential rents, with the private residential rental index increasing by 0.9% month-on-month, marking the largest rise in eight months. This increase follows a previous monthly rise, resulting in a cumulative increase of 1.2%, effectively reversing the early year's decline. Currently, the index has risen by 0.5% since the beginning of the year. As the peak rental season approaches, rents are expected to continue climbing. For instance, a studio unit at AVA 128 in Sai Ying Pun reached a rent of HK$66 per square foot, nearing the levels seen in luxury apartments in Mid-Levels West.

According to data from the Rating and Valuation Department, the private residential rental index recorded 186.9 points last month, the highest since December 2019, when it recorded 189.7 points. The monthly increase expanded to 0.9%, the sharpest rise since a 1.6% increase in August of last year. Over two consecutive months, the cumulative increase reached 1.2%, up 0.5% from the end of last year's 186 points.

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Among the five categories of units, three saw rental index increases of 1% or more last month. Notably, category D units, measuring between 1,076 and 1,721 square feet, experienced the most significant increase, with the latest index at 150.2 points. This represents a 1.1% rise from 148.6 points in March, reaching a nearly two-year high since recording the same index level in June 2022.

As the rental peak season arrives, leasing transactions across various districts have accelerated, leading to significant increases in rental rates per square foot for some residences. According to Midland Realty's branch manager, Tse Man-bak, a high-floor unit C at AVA 128, with a usable area of 227 square feet and an open layout with a sea view, was initially listed at HK$15,800 per month and eventually rented out for HK$15,000, equating to HK$66 per square foot. The owner, who purchased the unit in 2015 for HK$5.82 million, now enjoys a rental yield of 3.1%. Comparatively, a mid-floor unit B at the luxury development Ewan in Mid-Levels West, with a usable area of 588 square feet, was rented out this month for HK$40,000, equating to HK$68 per square foot. This indicates that the rental rate per square foot for the AVA 128 unit is approaching the level of luxury apartments in Mid-Levels West.

This upward trend in rental prices indicates strong demand for residential leases, suggesting that rents may continue to rise in the coming months. As Hong Kong's economy recovers and the peak rental season approaches, the rental market is expected to remain active. Both investors and tenants need to closely monitor market trends to make informed decisions in this dynamic market.