Hong Kong’s residential property market recovery is unlikely to be derailed by a potential increase in interest rates amid the Middle East conflict, as demand is supported by professionals relocating to the city and surging rents, according to Moody’s Ratings.

At the same time, the moribund office and retail property sectors were showing signs of improvement on the back of leasing activity despite continued headwinds, the credit-rating agency said in a commentary released on Monday.

“We expect residential prices to increase in 2026, supported by lower mortgage rates, demand from talent inflows into Hong Kong and homebuyers from mainland China,” it said.

Moody’s is the latest group to forecast further gains in the city’s property segments, following Morgan Stanley’s upgrade of residential price estimates to a 12 per cent rise this year from 10 per cent previously.

Prices of lived-in homes rose to a 28-month high as of March, according to the latest official data, sustaining a recovery that began 11 months ago and delivering a cumulative gain of about 9.2 per cent. From the peak in September 2021, however, prices were still down by more than 21 per cent.

Overall home sales climbed 16.7 per cent month on month to 7,368 in April, the highest since April 2024, when 8,551 units were sold, government data showed. The sales value in April increased about 15.4 per cent over March to HK$63.67 billion (US$9.4 billion).