Hong Kong's negative equity residential mortgage cases fell sharply to 4,356 by the end of June 2026, a 61.9% decline from the first quarter, according to data released by the Hong Kong Monetary Authority (HKMA). The drop marks a significant easing of pressure on homeowners who owe more on their mortgages than their properties are worth.
The numbers behind the decline
The HKMA's latest survey shows that the number of negative equity cases — where the outstanding loan balance exceeds the current market value of the property — stood at 4,356 as of June 30, 2026. That's down from 11,443 cases reported at the end of March 2026. The total value of these loans also shrank, from HK$6.2 billion to HK$2.3 billion over the same period.
Negative equity cases involving mortgages under the HKMA's 70 percent loan-to-value ratio fell to 1,200, compared with 3,200 in the previous quarter. The authority noted that the decline was broad-based across property segments.
What the data tells us
The drop suggests that property prices in Hong Kong have stabilized or recovered enough to lift many homeowners out of negative equity. The HKMA does not provide a breakdown by district or property type, but the overall trend is clear: fewer borrowers are underwater on their home loans.
Negative equity peaked in the city during the 2003 SARS crisis, when cases exceeded 100,000. The current figure is a fraction of that, though still above the near-zero levels seen in the mid-2010s. The HKMA has not commented on whether further declines are expected.
Negative equity can constrain the economy. Homeowners stuck in negative equity are less likely to sell or move, which can reduce housing supply and slow down transactions. Banks also face higher risk of default when loan-to-value ratios are stretched. The sharp reduction in cases eases those concerns, at least for now.
The HKMA's data covers residential mortgages only. Commercial property loans are not included. The authority said it will continue to monitor the market and update its figures quarterly.
The next set of numbers, covering the third quarter of 2026, is expected in late October.
