How did the residential market in Asia-Pacific countries perform in 2016 and what lies ahead?
Knight Frank, a London-based global real estate, collected opinions from its research teams in major countries and compiled them into a series of reports titled “Asia Pacific 2016 Round-up and 2017 Outlook.”
In the first three parts released so far, Knight Frank gave an overview of the residential markets across this region and touched on Singapore, Indonesia, Malaysia and Greater China. The last part, covering India, Australia and Cambodia, will be published later this week.
Overall, China dominated headlines with residential markets in large- and medium-sized cities continuing to see runaway prices in 2016, Knight Frank said. In response, more than 20 cities and the special administrative region Hong Kong introduced cooling measures to thwart a potential housing bubble.
In Australia, meanwhile, strong price growth also led to extra taxes for foreign buyers imposed in a number of states.
In contrast, residential markets in much of Southeast Asia and India remained slow or sluggish, the report found.
In 2017, real estate markets in the Asia Pacific region are dependent on two key factors, namely the wider economic environment and policymakers’ actions, according to Knight Frank.
“In the post-Brexit and Trump world, and with the likely demise of the Trans-Pacific Partnership (TPP), there continues to be much uncertainty about economic growth prospects. While on the one hand, this could directly impact residential markets; on the other, uncertainty does drive money away from equity markets into property,” the report said.
Here, a glimpse at the first batch of countries covered by the reports:
Residential markets in Singapore struggled throughout 2016 due to weaker economic and employment prospects, but high-end home prices saw signs of recovery in the first half of 2016, said Alice Tan, head of consultancy and research at Knight Frank Singapore.
In 2017, new home prices are likely to see limited increase as more new developments complete construction. “Secondary sales could contribute slightly higher proportion of total private home sales transactions in 2017, as the market shows greater interest for larger-sized and reasonably-priced private homes, coupled with potential onstream supply from home owners affected by possible interest rate hikes,” Ms. Tan said.
For Malaysia, 2016 saw a very subdued market and the trend is likely to continue next year. “Developers will face lower demand while implementing strategies to attract and improve sales to counteract the lower consumer demand due to the current state of the economy,” said Sarkunan Subramaniam, executive director at Knight Frank Malaysia.
The residential market in Indonesia saw an overall slowdown in 2016. “Recovery is expected in 2017 as long-term confidence in fundamentals, such as growing population, rising middle-income earners and stable political situation, increases,” said Hasan Pamudji, senior associate director of professional consultancy at Knight Frank Indonesia.
“The Mainland’s residential market improved throughout 2016 with more cities seeing price increases,” said David Ji, head of research at Knight Frank Greater China. “On the other hand, destocking inventory remains a major task in 2017, particularly for lower-tier cities.”
Mr. Ji predicted that in 2017, the government will impose further restrictions to control the market.
- Hong Kong
“In Hong Kong, total residential sales are expected to reach over 50,000 in 2016, largely on par with previous years. Given the recent price recovery partly prompted by investor interest, some of which are from the Mainland, the Hong Kong Government is keeping up various price cooling measures such as lowered Loan-to-Value ratios, tightened stress test requirements and a set of stamp duties,” Mr. Ji said.
In Taiwan, residential sales declined by 35% in 2016 from 2015; Taipei experienced its worst decline at 68%.
“The prime residential segment was not spared either —as a result of the Government’s cooling measures, including high holding taxes and credit controls—with transaction volumes slumping by 63% from the year before to a four-year low,” said Andy Huang, associate director for research at Knight Frank Taiwan.
Come 2017, the residential market is expected to rebound with its s low interest rates. Interest rates are expected to rise 0.25% in the second half of 2017. “However, Taiwan is still in a low interest rate environment and it is therefore, expected to have limited impact on residential markets,” Mr. Huang said.
More: Taiwan’s Tax Moves
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