Housing markets in Asia Pacific face uncertainty
Continued government intervention in property markets across Asia has proved effective, as lending restrictions, additional taxes and protection from hot foreign money has led to a quarterly drop in mainstream prices across Malaysia, Taiwan and Singapore.
The latest analysis report from consultants Knight Frank shows that China has seen house prices fall due to government policy and India, which is facing a stuttering economy, also saw prices turn negative over the last three months.
In contrast Indonesia has continued to see price increases on the back of rising incomes and urbanisation and an underlying demand for quality accommodation. Similarly, housing markets in New Zealand and South Korea also experienced solid price appreciation over the first three months of 2012.
But Australia continued to see its housing market deflate with the fifth consecutive quarterly price fall and Japan saw a continuation of its long term price falls.
The Chinese residential market is expected to continue to soften. Knight Frank believes that if economic data indicates a significant weakening in the economy over the rest of this year, the central government could ease some measures to stimulate activity.
In Malaysia it expects prices to remain steady over the coming months, with the possibility of a modest decline through the remainder of 2012. And in Singapore, given the large amount of supply coming onto the market, along with existing unsold inventories, prices of private residential properties are expected to continue to correct through 2012.
Indonesia is expected to continue to experience strong demand, although the effect of the new minimum down payment of 30% for mortgage loans from June 2012 could have an effect on performance, particularly in the middle to low end segments of the real estate market.
In Thailand, despite large amounts of supply, increasing labour, construction and land costs are being passed on from developers to purchasers, with modest price increases likely to continue through the year.
While in Vietnam, with inflation moderating, the market is looking at bottoming out and could see a pickup in activity if interest rates are able to be eased further.
In Hong Kong, buyers are expected to remain more reluctant to make purchase decisions, amid uncertainty in the world economy. House prices are expected to soften during the year, but at a modest rate, given limited supply.
India is likely to continue to see an uneven year, with the cities that experience high levels of speculative demand likely to be more volatile than those based primarily on end user demand.
In Australia, with sentiment remaining weak, the market is hopefully looking to a further interest rate cut to potentially stimulate demand and bring about a pick up in volumes and prices.