Asia-Pacific Residential Property Market Saw Growth in H2 2023, Says Study

Singapore (January 31, 2024) – Twenty-one out of 25 mainstream residential markets across the Asia-Pacific region monitored recorded positive annual price growth in H2 2023, with Singapore registering as the top-performing market with 13.7% YOY growth, said a Knight Frank study in its investor-focused Asia-Pacific Residential Review.

Kevin Coppel, managing director at Knight Frank Asia-Pacific, said: “The residential market experienced a surge in the past six months, following the FED’s decision to pause rate hikes, which encouraged potential buyers who had been waiting on the sidelines to make purchasing decisions. 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. Notable performers such as Singapore, Sydney, Brisbane, Perth, Manila, Delhi, and Bengaluru have benefited from factors like the wealth effect, demand exceeding supply, and optimistic economic growth prospects.”

Christine Li, head of research at Knight Frank Asia-Pacific, added: “Despite encountering unforeseen challenges such as geopolitical issues and persistent inflation, Asia-Pacific real estate has demonstrated a more optimistic outlook heading into 2024. While Greater China and South Korea face challenges from regulatory scrutiny and rising interest rates, the region as a whole has experienced buoyant sales, with pricing remaining stable and trending upward. The annual growth rate of 4.5% has reversed early pessimism in sentiment, and the robust economic momentum is anticipated to sustain homebuyer sentiment throughout 2024.”

Key highlights of The Asia-Pacific Residential Review H2 2023

The average year-on-year (YoY) residential price growth within Asia-Pacific in H2 2023 stands at 4.5%.

21 out of the 25 cities tracked recorded positive annual price growth in H2 2023.

Singapore registers as the top-performing market with 13.7% YOY growth. Despite a quieter sales market and reduced launches due to a challenging macroeconomic environment and higher acquisition costs following cooling measures in April 2023, Singapore remains a safe haven, 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 the Manila metropolitan area, prices surged by 8.6% YoY, driven by the resumption of Business Process Outsourcing (BPO) firms. This has led to an increasing number of expats returning to oversee business operations, contributing to the area’s strong performance.

In Australia, the Reserve Bank of Australia (RBA) 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 New Zealand, the housing market has exhibited signs of stabilisation 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.

Despite government attempts to stabilise the real estate sector, the extended liquidity crisis is expected to weigh on the economic recovery of the Chinese mainland 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 in Japan and South Korea, respectively. Seoul saw a 5.5% decline YOY due to the slowing export-oriented economy and higher borrowing costs.

Despite higher mortgage rates and prices, the demand for residential properties across India’s major cities has reached a 10-year high in 2023. The top 8 property markets experienced a 5% growth in annual sales, totalling 329,097 apartments in 2023.