Asia Pacific Region Enjoys Residential Market Price Increases Despite Economic Slowdown
In a puzzling scenario, some Asia Pacific countries are seeing prices
rising in their home markets despite a global economic slowdown,
according to the latest edition of Knight Frank's Asia Pacific
Residential Review compiled by Nicholas Holt. His findings were posted
in an online press release.
Hong Kong is seeing its strongest quarterly growth since third quarter 2009.
on quarter price growth jumped from 1.8% to 8.4% in Q2 in the Hong Kong
residential market as sentiment improved and pent-up demand drove up
transaction volumes, according to the report.
uncertainty in the world's economy continues to have an impact on
markets. Weaker economic growth has impacted sentiment and in some cases
the wealth of buyers, Still, the report finds, property as a hard
asset, continues to be regarded as a safe investment choice, reinforced
by inflation and often negative real interest rates.
situation continues to be further complicated by government intervention
into various property markets, which has continued through 2012. Hong
Kong, Indonesia and Malaysia recently introduced further cooling
Fear that activity from central banks in the Eurozone,
Japan and especially the US could lead to excess liquidity finding
itself into property markets this side of the world, means that it is
unlikely that any of the cooling measures will be lifted in the short
term, according to Knight Frank's report.
The conflicting policy
objectives of boosting economic growth while avoiding excessive asset
price appreciation means that government intervention in various forms
is likely to continue.
The economy in China is slowing down,
with growth now projected to come in under 8% in 2012, the lowest growth
rate since 1999. By contrast, the United States hopes its Gross
Domestic Product (GDP) number will reach 2 percent by the end of this
Shanghai and Beijing have shown a 7.1% year on year drop
in price at the end of Q2 2012, although prices in the affordable
segment of the market have continued to increase, indicating real end
user demand, the report finds.
"It will be interesting to
witness whether the new (China) leadership in November continues with
the property cooling measures, given the slowdown," Holt says in his
New home sales volumes in Singapore hit all an
all-time record year to date in 2012, with prices continuing to edge up
on a quarterly basis.
'With inflation significant and therefore
real interest rates negative however, there is a real incentive to put
money in property," according to Holt. "The low mortgage rates and the
status of Singapore as a 'safe haven' have helped facilitate this."
Total sales volume is expected to hit a new record by end 2012 with about 20,000 to 22,000 private homes sold.
Malaysia government has announced in its recent budget that Real
Property Gains Tax (RPGT) will be raised from 10% to 15% for properties
disposed of within two years and from 5% to 10% for disposal in the
third to fifth year, effective from Jan. 1, 2013.
introduction of a Loan to Value (LTV) cap of 70% in July has not held
back demand, as positive buyer sentiment continued to fuel price growth
in the Jakarta market. In Q2 2012, house prices increased 1.2% across
Indonesia, with the CBD Jakarta condominium market subjected to the
strongest demand, increasing 16.7% year on year.
Less supply has
come onto Thailand's Bangkok condominium market in 2012, as existing
stock is slowly absorbed and developers are diversifying towards the
resort destinations of Phuket, Pattaya and Hua Hin where demand and
supply dynamics are more favorable.
In India, although average
prices grew by 3.3% in Q2 2012 across the whole country, this average
masks difference between cities - the difference between Pune (+10%) and
Jaipur (-3%) was "a staggering" 13%, Holt notes..
Australia's price movements moved into positive territory in Q2 2012,
The Reserve Bank of Australia's interest rate cuts totalling 150 basis
points since November 2011 has not significantly stimulated the
Australian housing market.