Gradual rebound in Asia-Pacific cities, despite lower sales activity
There had been a gradual rebound witnessed in most of the Asia-Pacific cities tracked in the second half of 2020 (2H2020), despite an overall slowdown in sales activity due to the vulnerable economic state last year, says Knight Frank head of residential Asia-Pacific Victoria Garrett.
“Moving forward, we hope to see the residential markets stabilise as housing demand and prices bounce back to pre-Covid levels,” Garrett said.
According to Knight Frank’s latest Asia Pacific Residential Review 2H2020 report, the Asia-Pacific residential markets continued their stable trend in H22020 with 14 of the 24 regional indices tracked by the firm recording either stable or increased year-on-year (YoY) price growth, and an average annual price increase of 1.9 per cent.
The main driver behind this has been the low-interest-rate environment which has buffered the weakening economic environment stemming from the aftershocks post Covid-19’s peak around the middle of the year in Asia-Pacific, the firm said.
Knight Frank Malaysia associate director, international residential project marketing Dominic Heaton-Watson said the main driver in 2H2020 has been the low-interest-rate environment.
According to him, the low-interest-rate environment had buffered the weakening economic environment stemming from the aftershocks post-Covid-19’s peak around the middle of the year in Asia-Pacific.
“Resilience in economies and residential markets will depend on the smooth implementation of an extensive vaccine rollout in 2021 and support measures from Governments,” he said in a statement.
Based on report, housing prices in Singapore’s central core region fell 0.2 per cent YoY with the rest of the central region rising 5.1 per cent, on better-than-expected demand seen post the city-states Circuit Breaker between April to June 2020.
“This was also despite the government tweaking a regulation loophole on option issuances that had slightly inflated sales data in Q3 2020,” the firm said.
Knight Frank said that going forward, Singapore’s residential market is expected to remain steadfast in 2021 on the continued combination of low-interest-rates, low household leverage (home leverage rates for private homes in Singapore currently stand around 35 per cent), and gradual economic recovery.
The firm said all of these act as a floor to any further price decline in 2021.
In Thailand, the prices for condominiums in Bangkok fell three per cent YoY in H22020 on weak demand.
Weak demand was due to the city’s ongoing political uncertainty and the battered tourism reliant economy.
“Many developers had also delayed supply with an eye to releasing at the end of 2020, which compounded challenges as more supply entered the market. As a result, many are now offering discounts and offers to potential buyers to drum up sales.
“Going forward, with the challenging environment, we believe there is a heightened potential that the government could announce more policy easings in 2021, which should have a net positive effect on the market,” Knight Frank said.
The report showed that the housing market in Australia fell in H22020, recording a 1.3 per cent YoY mainstream growth average across Sydney, Melbourne, Brisbane, and Perth.
In China’s mainland’s Tier-1 capital cities of Beijing, Shanghai, Shenzhen, and Guangzhou, new home prices increased 3.9 per cent YoY on average in H22020.
Knight Frank noted that prices in China have remained relatively stable in H22020, as housing demand returned on the back of the country’s economic recovery, while at the same time weathering some
policy tightening measures by regulators who sought to prevent further bubbles from forming.
It expects housing demand will likely return to pre-Covid levels as the Chinese mainland economic recovery is expected to be in full swing this year.
In India, as the economy started to open with better preparedness for the pandemic, residential sales in H22020 surged by 60 per cent compared to H12020 in the top eight cities.
“Developer flexibility on price and payment terms complemented by proactive policy interventions in cities like Mumbai and Pune ensured that home buyers took the decision to purchase residential property.
“In this backdrop, the three major markets, Mumbai, NCR Delhi, and Bengaluru recorded a decline in price by an average -2.7 per cent YoY in H22020. With lower residential price level and multi-decade low home loan interest rate pushing affordability to its best level in many years, 2021 is likely to be a strong year with the tailwinds of strong economic growth,” the firm said.
Source: NST