According to the summary of the Hong Kong residential sales market released by Jones Lang LaSalle on September 5, Hong Kong's residential rents continue to rise, and the private residential rent index is only 3% lower than the historical high of 2019. The average rental yield of Class A residences (units with an area of ​​431 square feet or less) reached a new high in June since 2012.

According to the private residential rent index of the Hong Kong Rating and Valuation Department, Class A, B, and C units rose by 6.9% annually in July 2024, reaching the highest level since 2019. The current private residential rent index is only 3.0% lower than the historical high of 2019. Class A and B units (with an area of ​​431 to 752 square feet) recorded the most significant increase in rents, with rent indices increasing by 6.9% and 7.3% annually, respectively.

Clock Chu, Senior Director of Research at Jones Lang LaSalle, said that smaller units have experienced more significant increases in rents, mainly driven by non-local students and professionals who choose to live near commercial areas. At the same time, Class C units (with an area ranging from 753 to 1075 square feet) recorded a 6.3% annual increase. The increase in demand for such properties is mainly due to the trend of buying for rental purposes. An expected further decline in property prices and the financial burden caused by high mortgage payments make renting more attractive, especially for local Hong Kong families who want to improve their living environment.

With rising rents and falling property prices, the average rental yield of Class A units has risen to 3.4% in June, 70 basis points higher than the average level of the past decade, and reaching a new high since 2012.

From the data, it seems that the main factors driving the growth of the rental market in recent times are the increasing number of new households and the rising proportion of tenants compared to owner-occupiers. From June 2023 to June 2024, the average number of people per household decreased from 2.7 to 2.6, and the number of household increased by 1.5% annually, adding 39,800 households, reaching 2.76 million households. At the same time, a recent survey on the specific situation of talent families under the Talent Admission Scheme for Children found that 86% of non-local talent respondents are renting units, which is significantly higher than the overall population ratio.

Li Yuanfeng, Senior Director of Project Strategy and Advisory at Jones Lang LaSalle, said that this trend indicates that the continued demand for residential rental properties will continue to drive rental growth. In addition, the Hong Kong government is further promoting policies to attract talent, such as expanding the scope of the "High-end Talent Admission Scheme", which is expected to further support this trend. Therefore, the rent and yield of small and medium-sized residential units are expected to continue to rise in the short term.