Asian Property Markets Starts To Cool

Asian Property Markets Starts To Cool
News Posted On: 13 June 2013
http://www.property-abroad.com/thailand/news-story/asian-property-markets-starts-to-cool-19317724/

 

Asia has seen it’s housing markets continuing to accelerate ahead of the becalmed European scene, but the rate of that acceleration has slowed as cooling measures take effect. Global research and real estate consulting firm CB Richard Ellis released a report showing that among 13 of Asia’s major cities, nine saw only modest price rises of between 0.7% and 3%.

Price growth was led by New Delhi and Mumbai, which saw gains of between 2% and 4% quarter on quarter, an effect attributed to tightening supply, while other strong performers included Manila in the Phillipines and Kuala Lumpur. Mild price growth was recorded in Beijing, Shanghai, Guangzhou and Shenzen.

In Bangkok, prices fell by 0.5% but this follows several quarters of steady increases and CBRE points out that the statistical impression of the market was distorted by a number of specific transactions. Outside of these, many projects in Bangkok are still seeing rising prices, again attributable to short supply.

Sales volumes, however, are declining across the region. Transaction numbers fell in Beijing, Shanghai, Guangzhou and Shenzen, and CBRE attributes these results to measures introduced by the Chinese government to cool the markets in these cities. Hong Kong and Singapore have introduced measures to cool their own markets, primarily in the form of increased stamp duty, and sales volume has slowed here too.

CBRE says concerns remain about the high cost of residential property in many markets. While the demand from end users and long term investors is expected to remain firm, cooling measures introduced in many of Asia’s markets have already begun to dampen buyer demand.

‘Overall house prices are set to hold steady or ease slightly over the next few quarters. The risk of rising inflation means authorities are likely to keep cooling policies in place or to introduce additional controls should prices continue to surge,’ CBRE states in its report. The company further expects that, as a result of regulatory cooling measures, ‘buyers will take longer to negotiate and conclude deals and are likely to become more selective in terms of the assets they acquire.’

This more cautious outlook from buyers has had some local benefits to the rental market. The CBRE Luxury Residential Rental index increased by 0.2% quarter-on-quarter in the first three months of 2013, compared to a 0.7% decline in the fourth quarter of 2012. Rents increased by between 0.5% and 1.8% in Beijing, Shenzen, Bangkok and Kuala Lumpur but were flat in Singapore and New Delhi.

The luxury residential market is expected to be subdued for some time in the region, according to CBRE. ‘Multinationals remain cost sensitive and weaker demand from expats will put downward pressure on rents over the remainder of the year despite the fact that there may be an uptick in demand from potential buyers priced out of the sales market,’ the company’s report explains.

It seems that the measures enacted to cool markets are having the opposite effects from those intended in some cases. In Hong Kong, concerns over the housing market originate with the plight of Hong Kong citizens unable to afford housing; yet cooling measures have coincided with rises in prices and little effect on rents. While the liquidity of the market is reduced, access to it, particularly for those on lower incomes, does not appear to have improved.

Written by Les Calvert Overeas Property Specialist