if anyone stuck on same point, my observations are here.
houdini directly exporting png file from ‘HeightField_Output Node’ are not correct 16bit.
if you import them in photoshop or gimp, they will read that as 8bit png.
HOW I MANAGED TO FIX.
export 16bit tif >> load in gimp ( it shows its actually 32bit tif (strange) never mind…
change its precision to 16bit and export png (this one worked in unreal)
also i used all default from gimp export. no settings tweaked.