Major Bank Report | UBS: No Signs of a Small Spring Revival in Hong Kong's Residential Market

SighingCashier · 2026-03-31T14:34:51+00:00

UBS report indicates that the momentum of the Hong Kong residential market's recovery has weakened, and buyers are expected to adopt a wait-and-see attitude. If the Middle East situation persists, housing price growth forecasts will be affected; if the Federal Reserve cuts interest rates, it could support property prices, otherwise they may decline. Additionally, short-term market uncertainties impact new stock activities and rental recovery. The Hong Kong dollar interbank rate has risen, indicating capital outflows, but Middle Eastern professionals may choose to relocate to Hong Kong.

SighingCashier

2026-03-31 14:34:51

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UBS released a report saying that Hong Kong’s residential market’s “small spring rally” has not materialized. Signs indicate that the recovery momentum in Hong Kong’s residential market has started to weaken. With the outlook for interest rates still unclear, UBS expects more buyers to take a wait-and-see approach.

UBS analysis suggests that if the situation in the Middle East continues for 5 more weeks, oil prices are expected to stabilize at around $80 per barrel by end-2026; with the Federal Reserve cutting rates by another 50 basis points this year, Hong Kong residential prices will trend toward the upper limit of UBS’s earlier forecast, rising 10% for all of 2026. If the disruption continues for two more months, the average oil price would reach $100 per barrel; with the Federal Reserve not cutting rates, Hong Kong home prices would rise by only 5% for the full year, staying at the lower bound of the forecast—meaning that there will be no further upside for the rest of the year. If the Federal Reserve unexpectedly hikes rates, home prices could even turn around and fall.

The Hang Seng Index has fallen 11% from its peak. UBS expects that this year the recovery momentum in Central office rents will rise 3% to 5%, though it may be adversely affected in the near term. New listings activity could slow down, and financial institutions may freeze their expansion plans amid heightened market uncertainty.

On whether Hong Kong can benefit from Middle East capital and wealth transfers, UBS said that currently there is no sign of large-scale capital flowing into Hong Kong. The one-month Hong Kong dollar interbank offered rate has rebounded from 1.95% at the start of this week to 2.4%. The USD/HKD exchange rate remains biased toward the weak side of 7.82 to 7.84, reflecting short-term capital outflows. However, UBS noted that Mainland professionals who were previously based in the Middle East, as well as family offices, may move to Hong Kong after the conflict.

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