_Asia-Pacific residential market update 2017 Q1

In Australia, the market saw 1.5% price growth in Q4 2016 and 3.5% growth across 2016. Meantime, policy makers have encouraged tighter lending restrictions of the major banks across the board, including limiting interest-only loans to 30% of total new mortgage lending, down from 40% previously. This closer scrutiny has extended to include low-doc loans pushing beyond the 90% loan-to-value ratio (LVR), to include those also at 80% LVR. 

In China, national house price growth is slowing gradually – from 10.8% year-on-year to just 1.9% in Q4 2016. Strong interventions from the authorities to cool down the red-hot property markets in Tier-1 and Tier-2 cities are showing early results. In Beijing, some of the strictest restrictions were introduced, for example, down payments for second-time buyers of private sector-developed homes were raised to at least 80% of the purchase price, up from 70%, and the definition of “second-time buyer” was broadened to include those who have any mortgage history, regardless of where or whether they currently own a flat. 

Hong Kong house prices continue to increase, with the upward trend expected to persist throughout 2017. From Q2 2016 to Q4 2016, house prices increased by 11.2% – the strongest growth of markets tracked. Rebalancing the dynamics in the property market and providing affordable housing for the low and middle classes will be vital for Hong Kong’s newly-elected Chief Executive. 

The highly controversial demonetisation initiative in India is believed to be softening price growth in the short term, as it poses an unpredictable disruption. In recent months, developers refrained from announcing any new launches and buyers turned extremely cautious before committing to purchases. In the long run, however, the reduction in the black money economy is projected to augur well for the industry, with positive impacts expected to start to be felt by the end of 2017.

Considering all factors such as global and domestic economic conditions, Indonesia’s property market has entered a mature or consolidation phase. Quarter-on-quarter, house price in Indonesia slowed to a growth of 0.4% compared to the 2.4% increase year-on-year. The outlook for 2017 remains cautiously optimistic with opportunities and challenges. Despite the successful local election and tax amnesty program in early 2017, buyers are still adopting a wait-and-see approach. However, the new infrastructure underway and plans for its acceleration are expected to see increased consumer confidence and optimism in the near term.

House prices in Japan stayed flat in the second half of 2016, recording a marginal drop of 0.2% for the whole of 2016. The government relaxed its immigration policy and now allows highly-skilled foreigners to apply for permanent residency after as little as a year. As an attempt to boost its declining young working population, this new point system may potentially propel more demand in housing, further strengthening the appeal of Japanese residential properties.

The general performance and outlook for Malaysia’s property market is still lacklustre as both economic conditions and public sentiments are down. Given the relatively solid economic fundamentals, and a weak Ringgit (it slid close to 4.5% against the US dollars in 2016), some investors, including overseas buyers, may opt to capitalize on this opportunity to purchase discounted properties that offers stability and long-term potential. 

A lack of supply, rising demand and record low interest rates fuelled a 12.7% price growth in New Zealand, making it the second strongest-performing market worldwide last year. In recent months, however, market activity has seen some slowdown as the Reserve Bank of New Zealand continues to lobby the government to add debt-to-income limits to its macroprudential cooling measures. 

Taiwan’s housing market was the second weakest-performing globally in 2016, with a 6.5% year-on-year decline. The local property market has been affected by the integrated Housing and Land Tax and high holding tax at the beginning of 2016. As a result of the Government’s cooling measures, transaction volumes declined by 35% to 245,000 last year.

The slight tweaking of cooling measures in Singapore was a surprise move in March. The government reduced the holding periods for residential property purchase down to three years from four years while also lowering the Seller’s Stamp Duty by four percentage points. Additionally, the total-debt-servicing ratio framework for mortgage equity withdrawal loans with loan-to-value ratios of 50% and below has been removed. On the other hand, regulators also imposed the Additional Conveyance Duties on residential property holding entities, which closed a tax loophole that allowed developers to offload apartments in bulk to institutional investors and wealthy Singaporeans.

2016 was another strong year for Thailand’s prime and super prime condominium market, particularly in Bangkok. Despite a slowing economy, demand stayed high, supporting price growth. With limited land and growing competition for capital from other real estate classes, the prime residential sector is expected to witness moderate price growth amidst potentially slower sales activities in 2017.

Get more insights on Asia-Pacific Residential Review May 2017