Hong Kong's Negative Equity Crisis in 2025

May 14

4 minutes

The blog post has been auto-translated.

Hong Kong's Negative Equity Crisis in 2025 post illustrative image

In 2025, Hong Kong's property market is facing significant challenges again, with the issue of negative equity becoming a hot topic on the streets. According to the latest report by the Hong Kong Monetary Authority, the number of residential mortgage loans in negative equity has reached 40,741, hitting a new high since the SARS outbreak in 2003. This means more and more Hong Kong homeowners are facing falling property prices and excessively high loan amounts, even to the point of being unable to repay their original mortgage loans.

But for renters, what impact does living in a negatively equity property actually have? This time, we'll break down the 5 most common questions to help you better understand how to protect yourself during this property market volatility.

Question 1:Why does negative equity occur?

Negative equity is not caused by a single factor, but rather the result of multiple intertwined factors. Here are the main reasons for the negative equity issue in Hong Kong's property market in 2025:

High-leverage loans Many Hong Kong residents have opted for high loan-to-value ratios (LTV). Even with slow property market growth, these borrowers still face the risk of property prices falling more than their loan amounts. With rising interest rates, repayment pressure increases, ultimately leading to negative equity.
Price fluctuations Even for properties in prime locations, unstable market prices can cause certain properties to lose value. This is especially true for new developments that are overpriced, leaving most buyers unable to recover their initial investments and falling into negative equity.
Uneven regional development The development of certain areas in Hong Kong has not accelerated as expected, causing property prices in those regions to stagnate. Buyers fail to receive the anticipated returns on schedule, eventually becoming part of the negative equity issue.
Insufficient market demand Unstable market demand, particularly for new developments, may result from factors like location or inadequate facilities, preventing quick sales and leading to negative equity.

Question 2:Will the landlord's negative equity affect my lease? Generally speaking, the landlord being in negative equity does not directly affect your lease. As long as the landlord can make timely repayments, the bank will not demand early repayment of the loan, and your lease will typically remain unchanged. However, if the landlord fails to make payments on time, the situation may become more complicated.

Question 3: If the owner can't afford the payments, will the bank repossess the property?If the owner fails to make timely payments, the bank has the right to repossess the property, but this process does not happen immediately. Typically, the bank will go through legal procedures, which may take several months or even longer. Therefore, even if the owner faces financial difficulties, tenants usually won't be immediately affected.

Question 4:If the landlord's property is repossessed by the bank, will I as a tenant be forced to move out?If the bank repossesses the property, tenants are usually protected by law and will not be forced to move out immediately. According to Hong Kong law, tenants have the right to reasonable notice and sufficient time to handle relocation matters. You don't need to worry about being suddenly forced to move.

Question 5: As a tenant, what should I do to protect myself?

Understand the landlord's financial situationApart from checking the land registry to find out if the landlord is still paying the mortgage, understanding the landlord's financial situation can help you anticipate any future changes. Especially if the landlord is facing negative equity, the tenancy agreement may be affected. Maintaining communication and understanding whether the landlord is in difficulty is very important for tenants.
Sign a long-term leaseIf you plan to rent a place for the long term, consider signing a long-term lease. This can ensure the stability of your rent and reduce the risk of being asked to move out at any time.
Stay in touchMaintain good communication with the landlord to stay informed about their situation. If there are changes in the property market or the landlord faces financial difficulties, you can be notified immediately and prepare for moving or adjusting the rent accordingly.

Although the Hong Kong property market is currently facing some negative equity risks, as a tenant, as long as you maintain good communication with the landlord and understand the situation of the property you are living in, you can effectively reduce the risks. Additionally, signing a long-term lease and choosing the right property will help you stay steady in this volatile property market.

If you are looking for a place to rent in Hong Kong, why not try our LetsGetHome rental platform!