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Knight Frank launches Asia-Pacific Residential Review June 2015. 10 things to watch in residential real estate investing; US interest rates and household debt remain top concerns in Asia-Pacific

24 June 2015

Knight Frank Asia Pacific, the independent global property consultancy, today launches the Asia-Pacific Residential Review for June 2015 that tracks the price movement of 11 major markets in Asia-Pacific.  Q1 2015 saw house prices increase across six of these markets.

Mr Nicholas Holt, Head of Research for Asia Pacific
, says, “Despite facing many headwinds, the IMF is forecasting stronger growth in 2015 for six out of the 11 major countries we track. While this should be a positive sign for home owners or investors, the reality is that in many cases there has been a divergence between short-term economic growth and market performance.

“Perhaps now more than ever, property market observers are looking to policy makers for clues about how markets will perform. 
Monetary policy, tax, regulations and underlying fundamental drivers such as growth demographics and urbanisation will have a significant impact on markets.”

10 things that will influence Asia-Pacific residential markets

Macro-trend

Markets impacted

Specific example

Direct policy

Easing of cooling measures

China, Hong Kong, New Zealand, Singapore, Vietnam

The Singapore government could possibly start to review the cooling measures, specifically the Additional Buyer’s Stamp Duties (ABSD), as interest rates rise.

Monetary easing

Australia, China, India, Indonesia, Japan, New Zealand, South Korea, Thailand

China saw two interest rate cuts to-date in 2015.

Tax

Indonesia, Japan, Taiwan

The recent introduction of a revised super luxury tax and the potential extension of the luxury tax in Indonesia have already started to impact market behaviour.

US interest rates

Hong Kong, Singapore, India, Indonesia, Malaysia, Thailand

The impending normalisation of global interest rates is likely to impact the markets with pegged exchange rates to the USD – ie. SGD, HKD.  Some emerging Asian economies could also be vulnerable to capital outflows.

Policy related in some markets

Household debt

Australia, Singapore, South Korea, Malaysia, Taiwan, Thailand

Upward trend in consumer debt is a common characteristic of most Asia-Pacific markets, notably Malaysia.

Land supply

Hong Kong, Thailand (central Bangkok), India (Mumbai), Sydney, Beijing

The supply of land for development in Hong Kong has been one of the biggest bottle necks in one of the world’s costliest real estate markets.

 


Less directly policy related

Birth rate

China, Hong Kong, Japan, Singapore, South Korea, Taiwan

Japan population has shrunk since 2008 with little inward migration - demographics will continue to have an impact on both the economy and housing markets.

Political uncertainty

Singapore, South Korea, Taiwan, Thailand

Markets with upcoming elections tend to have a period of uncertainty until the new government has been set up. Political instability in Thailand undoubtedly impacted the attractiveness of Bangkok.

Sentiment

All markets

The waning optimism following Narendra Modi’s election victory in India.

Urbanisation

All markets

Continued population pressure, especially on Sydney and Melbourne – with nearly 90% of its population living in cities – is underpinning strong house price growth.

NOTE: The above groupings are very general to cover the entire region and mask differences between markets. The nature and structure of each country’s market varies significantly, and therefore reflects how influential policy makers can be in relation to housing markets. For example, China is much more policy driven, hence both birth rate (one-child policy) and urbanisation (Hukou household registration system) are heavily influenced by policy makers. This is not the case in most other markets.

Regional snapshot on price growth

  • Six of the 11 mainstream residential markets in Asia-Pacific saw house prices increase in Q1 2015 as reported in Knight Frank’s Global House Price Index.
  • Hong Kong sees the strongest price growth in the region. House prices in Hong Kong defied the ongoing cooling measures by rising a staggering 18.4% in the 12 month to Q1 2015. This is the highest annual price growth in the overall market since the second quarter of 2013.

  • China is expected to further liberalise outbound investment

  • Australian state capitals see multiple tiers of performance

  • Indonesia sees more fiscal and regulatory interventions.   

END

For further information, please contact:

Mr Nicholas Holt, Head of Research for Asia Pacific

nicholas.holt@asia.knightfrank.com +65 6429 3595 @nholtKF

Ms Rachel Loke, Asia Pacific Manager, Public Relations & Communications 

rachel.loke@asia.knightfrank.com +65 6429 3587 @knightfrank