Hong Kong home prices surge to near 2-year high, but Iran war clouds outlook

Hong Kong's residential property market continues its robust recovery, with official data from the Rating and Valuation Department showing lived-in home prices rose 1.6% in February. This marks the 11th straight month of price increases, accelerating from a 1.03% gain in January. Since reversing its downward trend in April 2025, the market has climbed nearly 8%, pushing the official price index to its highest level in 22 months. Rents in the city have also scaled new peaks, indicating strong underlying demand.

However, this positive data comes with a significant caveat: it does not yet account for the economic uncertainty sparked by the US-Israel war on Iran that began on February 28th. Analysts like Eddie Kwok of CBRE Hong Kong note that while Middle East tensions haven't had an immediate impact, persistently high oil prices could fuel inflation. This scenario might force central banks, including the US Federal Reserve—which recently held rates at 3.5%-3.75%—to raise interest rates again. The Hong Kong Monetary Authority has already warned the public to carefully manage interest-rate risks regarding property decisions, as Hong Kong's currency peg means it typically follows US monetary policy moves.