Due to geopolitical uncertainty surrounding the situation in Iran, the property markets in Hong Kong and Taiwan have also been affected. A report released by UBS, a Hong Kong based wealth management company, shows the recovery momentum of Hong Kong’s property market is weakening. It predicts that housing prices may fall if oil prices and U.S. interest rates rise. In Taiwan, real estate analysts say that rising oil prices could push the housing market into a “three-freeze” state.
Recovery of Hong Kong housing price loses momentum
According to a report by Ming Pao, UBS stated in its study that the market had originally expected a modest seasonal rebound in Hong Kong’s property market, but the latest data indicates signs of weakening recovery momentum.
The report noted that recent sales rates for projects such as Wheelock and MTR’s Deep Water South and Wing Tai Properties’ “Cloudview” have declined. Subscription rates for Sino Land’s Villa Garda, Henderson Land’s “The H Collection,” and Wang On Properties’ “Larchwood” are also relatively low, reflecting weakening recovery momentum.
In addition, transaction volumes in both the primary and secondary markets have fallen below pre–Lunar New Year levels. The bank predicts that, amid uncertainty over the interest rate outlook, buyers are becoming more cautious and adopting a wait-and-see approach.
Rising oil prices or interest rates may lead to falling housing prices
UBS made three major forecasts regarding the property market. Under a five-week disruption scenario, oil prices are expected to reach US$80 per barrel by the end of 2026, and the Federal Reserve will continue to cut interest rates by 50 basis points this year. Under these conditions, Hong Kong housing prices are projected to rise by about 10 percent.
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Under a two-month disruption scenario, if oil prices average US$100 per barrel this year and the Federal Reserve does not cut interest rates, Hong Kong housing prices would increase by only about 5 percent, which is at the lower end of the bank’s forecast range—implying there may be little to no further upside in prices later in the year.
In a downside scenario, if the Federal Reserve raises interest rates, Hong Kong housing prices could reverse and fall, similar to the rate-hike cycle from April 2022 to August 2023.
Taiwan housing market enters ‘three-freeze’ state
In Taiwan, according to real estate observer “Mai Cuo Ah Ming,” this recent surge in oil prices will ultimately transmit layered pressures to the housing market, creating structural impacts.
On March 30, Ah Ming analyzed on his Facebook page “Mai Cuo Ah Ming Knowledge+” that if international oil prices rise due to geopolitical tensions, it will directly increase market expectations for inflation. As inflation heats up, global central banks tend to maintain high interest rate environments or even delay rate cuts. This has a significant impact on housing markets that heavily rely on mortgages.
Ah Ming explained that while rising oil prices may appear to be an energy issue, they actually affect three interconnected factors: “Oil prices → Inflation expectations → Interest rate policy → Mortgage costs”
This chain ultimately transmits directly to Taiwan’s housing market. In a market like Taiwan, characterized by high property prices and heavy reliance on loans, any increase in financing costs immediately pushes buyers toward a conservative mindset.
He pointed out that the market does not cool gradually, but rather enters a state of “instant pause.” The Taiwan market is entering a “three-freeze” state:
- Transaction freeze – The gap in price expectations between buyers and sellers widens, and trading volume drops significantly.
- Loan freeze – Banks tighten risk controls and raise down payment requirements.
- Psychological freeze – Buyers generally adopt a wait-and-see attitude, fearing they may be purchasing at the peak.
He further noted that when these three freezes overlap, the housing market enters a state that appears stable on the surface but actually has reduced liquidity.
Ah Ming analyzed that, on the surface, oil price fluctuations may seem like an energy issue, but in reality, there is a complete financial transmission chain behind it: “Rising oil prices → Inflation expectations increase → Interest rates remain high → Mortgage costs rise.”
As a result, buyer sentiment immediately turns conservative, ultimately affecting housing market liquidity. “Especially in a market like Taiwan, characterized by high property prices and heavy reliance on loans, any increase in financing costs will instantly make buyers more cautious.”
He summarized: “What you see is the oil price, but what’s actually happening is that capital is re-pricing the property.” He emphasized that housing prices are no longer driven by sentiment but by interest rates. “Oil prices are just the trigger; the real core factor is the cost of capital.”
By Li Jingyao, Vision Times
