Asia’s property market is making a strong comeback with renewed buying interest for residential property powering sales on expectation that the economic downtrend is bottoming out, it is claimed.
The regional property market is showing more resilience compared with the 1997 Asian financial crisis which took a heavier toll on the market, analysts point out.
Growing evidence that the US recession is bottoming out will stabilise the region’s economy and spur its recovery during the second half of the year, they add and it is expected to provide a favourable basis for both residential sales and leasing markets in Asia, including Kuala Lumpur, Singapore, Hong Kong and Jakarta.
Industry observers are expecting a more robust revival in the region’s property market towards the end of the year, alongside a further pick-up in the global economy.
Residential property prices are forecast to increase further, driven by huge liquidity in the economy as well as further rebounds in residential rents.
Researchers UOB Kay Hian said in a recent regional market update that residential sales made a strong comeback in the second quarter of this year on expectations of an economic recovery and relative stability of the job market, despite a steep fall in gross domestic product growth rates, low mortgage rates and a lack of alternative high-yield investments.
‘Price levels rebounded by 5% to 10% quarter-on-quarter in the second quarter after a 30% to 50% fall from the end of 2007 peak levels. As the economic recovery gains ground in the coming quarters, we expect sales momentum to pick up and price levels to firm up further on the back of improving liquidity conditions and easy financing options,’ the report says.
‘Household affordability levels are relatively high this time around due to the higher income levels, record low mortgage rates and stronger net household wealth. Furthermore, favourable migratory patterns to Asia due to its attractive long-term growth potential help support a sustainable recovery in the residential sector,’ it adds.
But there is still some caution and the Malaysian Real Estate and Housing Developers Association, for example, is warning against too much heating in the market. President Datuk Ng Seing Liong said that property developers should be cautious and not overbuild just because the property market appears to have bottomed out in the second quarter.
Ng said developers were optimistic of a stronger uptake of properties in the second half of the year. However, many developers were still worried about clearing their inventory and reducing property overhang.
‘Their concerns include completing on-going projects in time, softening property prices and high marketing expenses,’ he told the 20th National Real Estate Convention.