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The rising unemployment rate is the last straw to drive down property price
Damon Ho
25th October 2025
The latest downturn in the retail industry continues. The Japanese roast beef restaurant "GYUTA" closed three stores within four months, and this brand had now closed down all its stores in Hong Kong. Furthermore, Aeon closed five of its stores in its two subsidiaries within three months. In Shatin of New Territories East, four stores in the mall of Hilton Plaza have also been shut down in recent months. All these phenomena indicated that the sluggish retail market had already driven up the unemployment rate to 3.9%. Consequently, it will march to 4.5% by the end of the year as expected.
Following the moderate increase of an unofficial property price index, several profitable second-hand transactions had been publicized by property agency firms. Their aim is to create a favorable deal making atmosphere so that they could lure uninformed investors entering the market to facilitate transactions and earned commissions. If the property market truly rebounded, these real estate agency firms would have already recruited more staff for expansion.
The retail and catering industries are shrinking, and the vacant rate of shops has been rising. The economic downturn across various industries has hung over the entire job market. Even a certain of graduates from the University of Hong Kong can only find short-term contract jobs after graduation. Counting on the current business environment, the unemployment rate will rise to between 5.5 to 5.8% next year.
The unemployment rate is currently rising slowly, and property prices may rebound slightly during this period.  However, those insignificant rebounds are unlikely to fundamentally change the slowly declining unemployment rate. Those eager landlords should act quickly while the market has improved slightly. On the other hand, potential buyers may wait patiently until the unemployment rate rises above 6% and then start to look for high-quality property yields more than 5%.
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