UBS: HK home prices flat until 2027 amid rate uncertainty, cross-border investment controls

UBS analysts said interest-rate uncertainty and tighter cross-border investment controls could limit further house price appreciation and expect their home price growth forecasts to be broadly flat for the second half of 2026 to 2027, compared to the market consensus of 5-6 percent in 2027.

UBS Greater China property research analyst Mark Leung said Hong Kong developers’ dividend yield spread trades above its historical average, and the market has not priced in AI-related labor disruption, Greater Bay Area integration, increased housing supply, and slower population inflows, which could affect future residential demand. 

Rents are forecast to grow at mid-to-high single digit until 2027 under tight near-term supply, but begin to slow from 2028, Leung said.

Job creation has weakened despite 3-4 percent GDP growth since 2024, Leung noted, especially with the over 70 percent decline in graduate job opportunities since 2023 and youth unemployment remaining elevated at 7-8 percent.

On the GBA integration, Leung mentioned improved transport and weaker income visibility might boost cross-border migration for cheaper housing, especially as the population ages. UBS estimates the Northern Metropolis housing shortage will last four years, shorter than the previous 12-year upcycle.

Meanwhile, the city is experiencing a major population shortfall, as net population inflows averaged only 32,000 per year during 2023 and 2025, well below the 153,000 per year required to reach the government’s 2042 town planning target of 9,600,000 people.

UBS expects office vacancy to stay in the low teens, limiting rent growth to 2 percent annually from 2025 to 2030, while AI-driven job displacement could offset benefits from declining supply. Leung also noted that diversification into tech, logistics, and education could boost Northern Metropolis by attracting population and housing demand.

Separately, Angus Chan, UBS head of Hong Kong research and Hong Kong strategy, said AI cost savings could potentially lift MSCI Hong Kong’s earnings to 5-10 percent until 2030. UBS estimates that 243,000 entry-level white-collar jobs and 444,000 clerical support jobs have a higher degree of overlap with AI capabilities in the labor market, which account for 7 percent and 12 percent of total employment, respectively. Chan said a portion of these are susceptible to disruption, but the impact can be partly mitigated by workforce reskilling.

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