The bad news is strongly concentrated in Europe as the scale of the European downturn, the sheer size of the downward pressure, continues to surprise.

Seven of the 10 Asian housing markets included in the survey performed more poorly this year than the previous year. The number of countries with rising house prices now equals market falls. Though numerically the rises tend to be larger than the falls, latest quarterly figures suggest weakness ahead in some countries.

In Singapore, house prices continued to fall as government market-cooling measures took effect. During the year to Q3 2012, house prices dropped 2.88 percent after falling 3.14 percent in Q2 and 1.36 percent in Q1 2012. House prices fell 0.34 percent during the latest quarter, Singapore ‘s fifth consecutive quarter-on-quarter house price decline.

Other Asian countries and capital cities which saw modest year-on-year house price falls to Q3 2012 included Shanghai, China (-2.34 percent), Tokyo, Japan (-1.94 percent), Thailand (-0.83 percent) and Indonesia (-0.23 percent).

Four Asian countries experienced slowing house price increases when compared to the same period last year.

In India’s capital New Delhi, house prices rose 5.31 percent during the year to Q3 2012, in sharp contrast with the 22.68 percent year-on-year rise seen in the same period last year. House prices fell 0.06 percent during the latest quarter.

In Malaysia, house prices rose by just 5.86 percent during the year to Q3 2012, after rising by 9.27 percent in Q2 and 9.51 percent in Q1 2012. House prices dropped 2.11 percent during the latest quarter.

In Hong Kong, house prices surged by 10.76 percent year-on-year to Q3 2012, but this is lower than the annual price increase of 12.92 percent seen in the same period last year. During the latest quarter, Hong Kong’s house prices rose by 6.69 percent.

The only exception is the Philippines, with house prices in Makati CBD rising by 4.63 percent year-on-year in Q3 2012, an improvement from the meagre growth of 0.64 percent during the same period last year. House prices increased 0.62 percent during the latest quarter. The Philippines’ economy is expected to expand by a healthy 4.80 percent this year.

Good news:
– The U.S. housing market recovery continues. The Federal Housing Finance Agency (FHFA) seasonally-adjusted purchase-only house price index rose by 2.31 percent year-on-year in Q3 2012, the highest growth seen since Q2 2006. The nationwide seasonally-adjusted S&P/Case-Shiller home price index also rose by 1.92 percent during the year to Q3 2012, in sharp contrast with its seven percent year-on-year decline seen in Q3 2011.
– Dubai, UAE, has rebounded strongly. The price index for all residential properties surged by 14.43 percent during the year to end-Q3 2012, as compared to a meagre year-on-year increase of 0.96 percent seen in the same period last year.
– Pacific housing markets are now recovering. New Zealand ‘s median house price rose by 5.19 percent during the year to end-Q3 2012, in sharp contrast with the 4.39 percent year-on-year decline in Q3 2011. Likewise, Australia ‘s housing market is also improving, with house prices in its eight major cities falling by just 1.57 percent year-on-year in Q3 2012, the lowest decline since Q4 2010.
– Positive news for some individual European housing markets. House price falls in Ireland may be decelerating. Ireland ‘s residential property price index fell by 13.17 percent year-on-year in Q3 2012, the lowest decline since Q1 2011. In addition, house prices have risen significantly in Austria, Turkey, Latvia, Germany, Iceland and Finland.

Bad news:
– Many European housing markets remain extremely depressed, and continue their rapid spiral downwards. House price falls are accelerating in Greece, Spain, Netherlands, Portugal, Croatia and Lithuania. Of the 23 European countries included in the survey, 14 countries recorded house price falls while only nine countries have seen house price increases. The nine weakest housing markets in our global survey are all in Europe.
– The Asian housing market surge has weakened. Seven of the 10 Asian housing markets included in our survey performed more poorly this year than the previous year. But Asia’s biggest housing market, China, is recovering, judging by the latest quarter’s figures.

In inflation-adjusted terms, 23 housing markets have shown better year-on-year figures in Q3 2012 than in the same period last year, while 20 housing markets have shown poorer performance. However the nominal figures are slightly more disappointing—25 housing markets performed more poorly while only 19 performed better.

In conclusion, of the 44 countries for which quarterly house price figures are available, house prices fell in 23 countries, and rose in 21 countries during the year ending in the third quarter of 2012, again in inflation-adjusted terms.

The Global Property Guide’s statistical presentation uses price changes after inflation, giving a more realistic picture than the more upbeat nominal figures usually preferred by real estate agents. Nominal figures can be misleading, as suggested by the fact that year-on-year in Q3, nominal house prices rose in more countries (27 countries) than fell (17 countries).

Source : PropertyGuru – 12 Dec 2012

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Reports from Hong Kong, Sydney, Singapore and Beijing reveal that property values have declined, while the Kuala Lumpur and Bangkok markets remain unchanged.

As witnessed in Singapore, the decline comes after the government implemented cooling measures to rein in high property prices.

“Right now, to many of the governments including China and Singapore, they see more risks in asset bubble forming than a sharp fall in housing prices,” said Jinsong Du, an analyst at Credit Suisse.

In China, where Beijing has imposed curbs to clamp down on speculation, average property prices in 70 cities recorded their first monthly decline in October.

“We still see a strong medium-, long-term demand for residential developments in China because people always want to upgrade or improve their living standards,” said Justin Chiu, Executive Director of Cheung Kong Holdings Ltd, a Hong Kong developer that has recently increased its presence in China.

China’s National Bureau of Statistics noted that total residential sales in the country fell 3.3 percent year-on-year in November, following an 11.6 percent drop in October. The luxury property sector was also down three percent year-on-year in Beijing.

Also, after decades of steady growth, Australian property values have dropped this year. Meanwhile, property prices in Japan continue on a 20-year downward trend.

Source : PropertyGuru – 19 Dec 2011

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But regional developers and market observers say it is not all doom and gloom yet for the sector.

The integrated resorts and international events like the F1 have brought the spotlight on Singapore.

They have also piqued foreign investors’ interest to invest in luxury properties, say analysts.

But now investors and analysts are bracing themselves for a looming correction in the property market.

And this time, even luxury properties will not be spared.

Panache Management CEO Alex Schlaen, said: “It will be very minor because the luxury (property market) didn’t recover to the heights of 2007, versus the mass market which went way beyond the peak of 2007. This market will see a correction of between 10 and 20 per cent. The correction will probably last for two years and it will probably start recovering back to the new peaks that we haven’t seen yet in Singapore.”

Three years ago, Mr Schlaen has predicted that Chinese investors will come to buy Singapore properties.

So far his prediction has been spot on.

Now, he reckons that Singapore’s property prices still lags Hong Kong and has a lot of room to catch up.

And he says prices in Singapore will only reach at par with Hong Kong in 10 years.

This means investors can potentially make a profit from the Singapore market.

While China’s real estate market is seeing more cities with lower property prices, some property developers Channel Newsasia spoke to are still bullish on the property market in China.

Candy & Candy founder Nick Candy, said: “The best locations are in Shanghai. I won’t think it will have a 30 per cent drop. If there is a large correction, I believe it would recover quickly again. I am very bullish on China. I believe that China is a great place to invest. I think people will do very very well there.”

The Pudong River is where Nick Candy, who made his fortunes developing homes for High Networth Individuals including Hollywood stars, will be making his mark in Asia.

Source : Channel NewsAsia – 29 Nov 2011

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In China’s biggest cities, growth slowed in April after the government stepped up property measures. In India and Australia, prices are falling after the steepest interest rate increases among major economies. In the financial hubs of Hong Kong and Singapore, price growth is moderating after increased deposit requirements and land releases. In Japan, the worst earthquake on record snuffed out signs of a recovery, while South Korean banks remain weighed by soured property loans.

“Across Asia-Pacific, you have seen a policy induced pullback,” said Rod Cornish, head of real estate strategy at Macquarie Capital Advisers in Sydney. “It’s a required pullback because if some of these markets had been allowed to continue, you would have had more overbuilding, more overvaluation, and a bigger correction down the track.”

Asia’s recovery from the credit crisis turned into a boom for many of the region’s property markets as surging economic growth and low interest rates threatened to create an asset bubble jeopardizing the world’s fastest economic expansion. The signs of moderation in prices may reduce the need for further tightening measures and bring Asia closer in line with Europe and the U.S., where housing markets remain weak almost three years after the collapse of Lehman Brothers Holdings Inc.

Home prices in 20 U.S. cities dropped in March to the lowest level since 2003, showing housing remains mired in a slump almost two years into the economic recovery. Prices in Ireland, among the worst hit nations by the global recession, fell 1 percent in April from March and have now tumbled 40 percent since peaking in 2007.

Cooling Momentum

“Central banks are raising rates and that is certainly helping to cool the momentum along with the different macro- prudential measures,” said Tai Hui, the Singapore-based head of Southeast Asian economic research for Standard Chartered Plc. “We are still expecting more rate increases which will continue to be helpful in containing any exuberance in the property markets.”

Asia’s developing economies will grow 8.4 percent this year, compared with 1.6 percent in the euro region and 2.8 percent in the U.S., according to International Monetary Fund projections. China’s economy is forecast by the IMF to expand 9.6 percent this year.

A record $2.7 trillion of loans extended over two years helped fuel China’s property prices to record levels even as authorities set price ceilings, demanded higher deposits, and limited second-home purchases. China’s fixed-asset investment excluding rural households expanded 25.8 percent in the first five months of the year, up from 25.4 percent in January- through-April.

Wen’s Pledge

Chinese Premier Wen Jiabao said on May 1 that the nation is “determined” to bring down housing prices in some cities to a “reasonable” level. The government raised the minimum down payment for second-home purchases this year and introduced residential taxes in Shanghai and Chongqing. Beijing and Guangzhou also imposed restrictions on housing purchases.

The measures may have had some effect. China’s home prices rose at a slower pace in major cities in April even as they quickened in smaller ones. The government last month said it won’t ease property curbs and ordered local officials to continue to implement measures to control prices.

Negative Outlook

“Most speculators have been weeded out of the bigger first-tier cities and we can see a significant slowdown there as they move on to smaller cities with fewer restrictions,” said Liu Li-gang, who formerly worked for the World Bank and is chief China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong. “Underlying demand for property is still strong but we aren’t likely to see rapid price increases as we have seen previously.”

Standard & Poor’s on June 15 cut the ratings outlook on Chinese developers to “negative” from “stable,” saying tighter credit and further government curbs may lead to rating downgrades in the next year. Property sales may start to slow as the government’s policy “starts to bite,” leading to price cuts that may drive home prices 10 percent lower in the next 12 months, the credit rating company said.

China’s central bank this week increased banks’ reserve requirements to drain cash from the economy after consumer prices rose 5.5 percent in May, the biggest gain since 2008. The national statistics bureau is scheduled to report May’s home price data on June 18.

‘Bubble’ Warning

Hong Kong, which Savills Plc says is the world’s most expensive place to buy an apartment, reported the number of home-sale transactions fell for a fifth straight month in May amid rising mortgage rates. Home prices have surged about 70 percent since the start of 2009 on record-low borrowing costs and an influx of buyers from other Chinese cities.

The city’s Chief Executive Donald Tsang said in an interview in Melbourne today that home prices are “quite frightening” as growing wealth in China fuels increases of 2 percent a month.

HSBC Holdings Plc and other lenders raised mortgage rates in Hong Kong after the central bank in April warned of the risk of a “credit-fueled property bubble.” Hong Kong home prices could fall as much as 20 percent in 2012 because of higher mortgage rates, according to Barclays Capital Asia Ltd.

The Hong Kong Monetary Authority has tightened rules on mortgage lending four times since October 2009, most recently on June 10 when it raised down payments for homes costing more than HK$6 million ($771,000) and increased deposits for foreign buyers. HKMA Chief Executive Norman Chan said property curbs introduced by the government have reduced speculation.

“Credit conditions have become more onerous and that has helped take some steam out of the property market across Asia,” said Vishnu Varathan, an economist at Capital Economics (Asia) Pte in Singapore. “Gains in property markets around the region have slowed but they haven’t decisively peaked.”

Singapore Curbs

In Singapore, where demand for private homes and mortgages has boosted earnings for companies including lender DBS Group Holdings Ltd. and real-estate developer City Developments Ltd., measures to curb property speculation have resulted in slower price gains for six consecutive quarters.

The government in January raised the down payment on second mortgages and extended the sales tax for home sales to four years from three as it added more rules to curb speculation. Sales transactions are still rising as foreigners increase purchases in the city-state, even as price gains slow.

“As long as the low interest rate environment prevails, the risk of further asset inflation in the property sector is still pretty real” in Singapore and Hong Kong, Standard Chartered’s Hui said. “For these two economies, rates are still very accommodative and will remain so until the Federal Reserve starts to hike. Foreign participation in Hong Kong and Singapore are also very large and that skews things a bit.”

Faster Cycles

Property cycles in the two cities are much shorter than in other parts of Asia, at about three to four years from trough to peak, said Macquarie’s Cornish. Authorities in both centers are aiming to achieve price stability rather than declines, Cornish said, with Hong Kong’s measures constrained by the currency’s peg to the U.S. dollar.

“They have an economy tied to China and rates tied to the U.S.,” Cornish said. “In Hong Kong, you’ll see a more sizable impact on prices when rates start to pick up in the U.S.”

In India, where the central bank has raised rates 10 times since March last year, Mumbai home prices have declined 20 percent from their 2010 peak. Lower sales, higher land values and increased borrowing costs are forcing developers to reduce prices, according to Jones Lang LaSalle India. Prices in the city may decline as much as 35 percent over the next two years, according to Liases Foras Real Estate Rating & Research Pvt.

Still Hawkish

Australia, the first Group of 20 nation to start raising rates after the global financial crisis, boosted borrowing costs in part to contain house prices. Demand for mortgages grew at the slowest pace since at least 1977 in April.

After seven increases since October 2009, Australia now has the highest benchmark rate in the developed world and home prices are falling at the fastest pace since the crisis. The Reserve Bank of Australia on June 7 cited softening house prices and modest credit growth in a statement explaining its decision to keep interest rates on hold this month.

“The central bank’s base case is that the housing market is subdued and the consumer remains on the sidelines,” said Kieran Davies, a Sydney-based economist at Royal Bank of Scotland Group Plc. Still, an expected pick-up in inflation means “there is still a tightening bias.”

RBA Governor Glenn Stevens on June 15 reiterated that policy makers may need to raise interest rates at some stage.

Policy Caution

Japan land values declined at more than two-thirds of the country’s land sites in the three months ended April 1 after March 11’s record earthquake and tsunami slowed a recovery in the property market, according to a quarterly land ministry survey on May 27. The bad-loan ratio for South Korean bank lending for real-estate projects rose to 18.35 percent in the first quarter as builders sought bankruptcy protection or debt rescheduling, the Financial Supervisory Service said on May 20.

As a struggling U.S. economy, European debt woes and a Japanese recession weigh on global growth, Asia’s policy makers may be reluctant to impose more measures to damp home prices.

“Property markets react with a much longer lag than the rest of the economy and insofar that we continue to see the rate of transactions ease and slower price gains, that may be cue enough for policy makers to back away a bit,” Varathan of Capital Economics said. “They won’t want to overact and see the whole market crashing down.”

Source : Bloomberg – 17 Jun 2011

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Asia’s residential property market stole much of the limelight this year as concerns of record property prices spurred government intervention in the form of repeated cooling measures. Singapore, China and Hong Kong were among the jurisdictions that have introduced anti-speculative measures to cool down their red-hot property market.

China was at the forefront of introducing price controls after property prices in the country surged 7.7 per cent over an 18-month period. This prompted the government to introduce measures such as a ban on mortgage loans for third properties.

In Hong Kong, prices grew by 50 per cent this year alone and to curb the rapid increase, policymakers had imposed a 15-per-cent stamp duty last month on properties sold within six months of its initial purchase.

These measures are considered drastic, said analysts, but have worked to cool the property market, albeit with varying results.

In Hong Kong, weekend sales of homes in the resale market dived 83 per cent immediately after the stamp duty tax was increased. But Hong Kong property market watchers still believe residential property prices could increase by 10 per cent next year.

“After the introduction of the stamp duty in Hong Kong, a lot of developers criticised the move for overdoing it,” said Mr Colin Tan, head of research and consultancy at Chesterton Suntec International.

Singapore also implemented its own set of cooling measures, the latest of which were introduced in August. They include lowering the mortgage loan-to-value ratio to 70 per cent for owners intending to buy a second and subsequent properties.

The measures had some slowing effect on the property market, but robust housing demand, low interest rates and ample liquidity meant that the measures did not deter home buyers.

Latest home sales figures from the Urban Redevelopment Authority (URA) highlighted that, despite the cooling measures, last month saw sales hitting 1,909 units – a spike from 1,058 units in October.

However, quarterly prices fell signficantly since the introduction of the measures – private residential property prices grew at 5.6 per cent and 5.3 per cent in the first two quarters of this year, dropping significantly by the third quarter to 2.9 per cent following the latest batch of cooling measures.

Singapore’s cooling measures were aimed at reducing speculative activity in the market, and analysts said that it has indeed achieved its objective to varying degrees. Yet, the market has remained robust and analysts said that it is because of the strong underlying demand for private homes, and not speculation, which has driven the market higher in recent months.

“The last round of Government cooling measures, which imposed several restrictions on re-selling, was ultimately incrementally adjusted by homebuyers,” said Mr Ong Kah Seng, Cushman & Wakefield’s Asia-Pacific senior manager of research.

“Many homebuyers are currently buying with the self prophecy that not buying a property now will mean one will miss the opportunity ahead – hence many are buying to fulfil the aspiration to own a piece of private property instead of hoping to make quick profits from it,” he added.

To meet the demand in housing, the government will release about 30 land sites next year – roughly the same number of sites released this year.

Those balloting for their Housing Development Board (HDB) flat also have more reason to cheer. In the first quarter of next year, HDB will launch about 5,000 Build-to-Order HDB flats.

Still, some analysts expect more cooling measures to emerge next year. “It is inevitable,” said Chesterton’s Mr Tan.

URA’s property sales and price data recorded this month will ultimately decide on the need for more cooling measures, said analysts. But they may not be as drastic compared to those imposed by Hong Kong and Chinese policymakers, analysts said.

Curbing demand too drastically may spell bad news for developers, too. “If prices fall too hard, this may mean thinner profit margins for developers,” said Mr Tan.

Further steps may include tightening CPF policies to reduce withdrawal limits and lowering the loan-to-value ratio, particularly for second home mortgages, said Mr Ong.

Analysts said with a bright economic outlook going forward, coupled with low-interest rates and ample liquidity, home prices may still increase about 5 to 12 per cent next year.

MediaCorp also understands that the URA is seeking reactions and feedback from property consultants to study the need for more regulation in the sector.

Source : Today – 23 Dec 2010

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Still, industry watchers said that prices will have room to move upwards over the next two years.

This is because interest rates in Hong Kong continue to be low, and high-end property prices in Singapore are still below their peak.

Private home prices in Singapore rose by 24 per cent in the second half of last year, causing the government to step in.

Over in Hong Kong, the government also announced measures to avoid an asset bubble – after property prices rose by some 30 per cent last year.

The Chinese government is also doing its part to cool its red-hot property sector by tightening credit.

Analysts said these moves will limit price growth this year, but overall, they still expect prices to move upwards, even if at a slower pace.

Donald Han, managing director, Cushman & Wakefield, said: “With the introduction of these measures, and the fact that the government is keeping a lookout on the market, they may continue to intervene.

“We would expect the market currently to come down to between 8-15 per cent, depending on what market you are in in Asia Pacific. So it would probably come down by a few percentage points in terms of price increases.”

Analysts note that Singapore’s high-end residential market remains below 2008 peaks by some 20 per cent.

Meanwhile – they also say, the measures are only aimed at moderating the price increases.

Karamjit Singh, managing director, Credo Real Estate, said: “The measures that were announced by the Singapore government on February 19 do not address the root cause of the problem yet. The root cause of the problem is a short-term supply crunch at the lower end of the market, but it definitely helps mitigate the risk of bubbles being formed in the future.”

Experts said the factors set to drive prices higher this year are investors searching for higher yields, continuing hot money inflows and continuing low interest rates causing lower borrowing costs for buyers.

Source : Channel NewsAsia – 2 Mar 2010

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A survey by the Asian Real Estate Association (AREA) showed that more than half of the investors polled expect signs of improvements in the market by 2010.

This optimism has prompted investors to allocate more funds into all real estate investment categories in the next three to five years.

The optimism is due to continued growth in emerging Asian economies like China and India, as well as increasing levels of professionalism and transparency in markets like Singapore.

Observers said this is expected to fuel investor interest in the regional property market.

There has also been a shift in the perception of investors in favour of Asia.

Robert T. Lie, managing director of Redevco Asia, said: “When we look back a couple of years, Asia was seen as a very risky market so investors who are allocating funds to Asia are also demanding high returns. A lot of fund managers did what investors asked and developed a lot of opportunistic products.

“What we see now, more and more, is that Asia becomes part of the normal investment world, with room for opportunistic and value-added products, but increasingly for qua-type products – that’s definitely a development that we see.”

A survey by AREA also highlighted China, Australia and Japan as the top three countries for investments. China’s residential and retail, and Australia’s and Japan’s office markets were the preferred sectors in the region.

Among the three types of investors polled, institutional investors favoured residential and retail sectors in China.

Fund managers focused their investments on China’s retail sector as well as Australia’s and Japan’s office sectors, with Japan office investments the favourite among fund managers.

Interestingly, compared to last year’s survey results, Australia posted a huge leap in terms of investors’ preferences. AREA attributed this surge to possible property prices and currency effects, as well as a change of sentiments among investors.

The annual survey, which is into its second year, aims to provide a global view on the trends in Asia’s non-listed property market.

A total of 73 organisations in Europe, Asia and the US, including institutional investors and fund managers, participated in the online survey this year.

Source : Channel NewsAsia – 24 Jun 2009

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Investors are finding it tough, with liquidity drying up, yields compressing, and valuations in the US and UK dipping.

However, some analysts said that opportunities do remain and may even grow, as markets approach fair value.

They noted that demographics in emerging Asia also support long-term investment horizons.

Property prices around the world have suffered as investors attempt to ride out the current uncertainty in the market by holding back funds.

Ong Choon Fah, executive director and head, SEA Consulting and Research, DTZ, said: “Because there is so much uncertainty around the markets – financial markets, capital markets, equity markets – people don’t really know what to think, and when one is confused, people don’t want to make major decisions.”

Property watchers said that yields and prices are expected to correct further on the downside in the year ahead – with some sectors hit more than others.

David Green-Morgan, Asia-Pacific Research Director, DTZ, said: “Potentially, industrial and retail sectors may correct more than the commercial office sectors, which tends to be more resilient…the down side tends to be less in those areas.”

DTZ said that the one bright spot in the real estate market lies in Asia-Pacific, where economies have held up comparably well so far.

Mr Green-Morgan said: “At the moment, it is holding up quite well and that is due to the fact that there is a much bigger domestic market in Asia-Pacific than in previous slowdowns, and also because there is much more wealth in Asia-Pacific, than historically.”

And DTZ said this has kept overall property prices reasonably firm as prospects for capital growth dry up.

The focus is now on occupier fundamentals.

And for this, DTZ’s top picks currently include resorts in Thailand’s leisure sector, and its serviced residences.

It also likes emerging markets such as Vietnam – where demographics are a key factor.

Ms Ong said: “Although Vietnam has its own set of problems, if you look beyond the immediate future, it has a huge population…it has one of the longest coastlines in Asia. So again there are opportunities there.”

DTZ said that another area of interest is Indonesia, where residential prices have come off highs, coupled with a growth in infrastructure projects.

Source : Channel NewsAsia – 25 Aug 2008

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