The Asia-Pacific residential property market Asia-Pacific witnessed accelerated growth in H2 2023, with Singapore registering as the top-performing market with 13.7% year-on-year (YoY) growth, according to a recent report.
Overall, 21 out of 25 cities monitored in the region recorded positive annual price growth in H2 2023, with the average YoY residential price growth in the cities surveyed coming in at 4.5%, finds Knight Frank’s Asia-Pacific Residential Review Index.
Singapore, despite a quieter sales market and reduced launches due to a challenging macroeconomic environment and higher acquisition costs following cooling measures in April 2023, remains a safe haven, the report notes, attracting talent and maintaining population growth. This, coupled with the wealth effect, is expected to support stable prices despite a decline in transaction volumes.
In Australia, the Reserve Bank of Australia maintained its official cash rate target at 4.35% as of December 2023. With the exception of Melbourne (up by 3.2% YoY), the rest of the major Australian cities, namely Perth, Sydney, Brisbane and Gold Coast’s mainstream residential markets, all experienced double-digit growth in 2023, ranging between 10.8% and 12.8% YoY. Prices are expected to rise by mid-range single digits in 2024.
In the Manila Metropolitan area, prices surged by 8.6% YoY, driven by the resumption of business process outsourcing firms. This has led to an increasing number of expats returning to oversee business operations, contributing to the area’s strong performance.
In India, despite higher mortgage rates and prices, the demand for residential properties across the country’s major cities reached a 10-year high in 2023. The top eight property markets experienced a 5% growth in annual sales, totalling 329,097 apartments in 2023.
In New Zealand, the housing market has exhibited signs of stabilization and has recovered some losses since reaching a floor in the second half of 2023. Prices in Wellington and Auckland rose by 2.75% and 0.5% YoY, respectively, reversing the earlier double-digit declines.
In mainland China, despite government attempts to stabilize the real estate sector, the extended liquidity crisis is expected to weigh on the economic recovery of the market. Weakness in the housing market will persist into 2024, with transaction volumes still declining, signalling room for further contraction in the sector.
The Hong Kong residential market is facing similar challenges, including weak market sentiment, high-interest rates and a substantial inventory of unsold completed new flats. Elevated mortgage rates are impacting homebuyers’ affordability, leading them to take a more cautious approach.
Tokyo and Osaka continued to see price gains as yields over debt costs still offer good spreads for investors.
Seoul saw a 5.5% decline YOY due to the slowing export-oriented economy and higher borrowing costs.
“The residential market experienced a surge in the past six months, following the [US] Fed’s decision to pause rate hikes, which encouraged potential buyers who had been waiting on the sidelines to make purchasing decisions,” says Kevin Coppel, managing director at Knight Frank Asia-Pacific. “Ongoing constraints on the supply side, including input costs, labour shortages and construction delays, have played a role in supporting prices in numerous cities across the Asia-Pacific region.”
