Activity has slowed in residential property within the Asia-Pacific region as policy tightening has rippled through some markets, with buyers and sellers waiting for conditions to stabilise, said S&P Global Ratings in a report published last week.
According to the report, Asia-Pacific 360 Macro-Housing Report: Activity Slower In Residential Markets, sentiment in the residential market has weakened as prices across much of the region were either flat or have declined gradually over the past six months.
The region retains binding macroprudential regulations, such as loan to value ratios. Price-cooling measures also remain tight, including stamp duties. Weaker sentiment and the tight regulatory environment have deterred market participants, the report found.
‘Oz real consumption growth slowed’
Australia’s housing slowdown is continuing. Auction clearance rates have recently improved, but it is too early to signal an imminent turn in the market. The property cycle will have some impact on broader economic growth, and S&P Global Ratings estimates that a 10 per cent decrease in the value of household residential assets would lead to a near one per cent fall in consumption.
“We estimate that Australia’s current housing slowdown is dragging down real consumption growth by a little under one percentage point annually,” said Vishrut Rana, Asia-Pacific economist at S&P Global Ratings. “The property cycle will also influence other parts of the economy, including construction and residential investment.”
China is a notable exception. Policy easing, including some slight relaxation of home purchase restrictions, has led to a modest recovery of the residential markets in China, reversing last year’s deterioration.
Regulators have eased price-cooling measures in lower-tier cities and mortgage rates have edged lower. Further policy easing is unlikely, however, as policymakers remain wary of overheating markets. This will likely restrain further price and activity increases, said the report.
In Hong Kong, residential prices have been rising again since February after falling for just seven months. Housing remains severely unaffordable despite the nine per cent drop in the price index from its highest level last year. Mortgage credit conditions have eased recently as markets expect more dovish monetary policy in the US.
“The economic environment in Hong Kong is challenging this year but that isn’t stopping residential prices from rising,” said Rana. “There is significant latent demand in the market amid supply constraints, and mortgage credit conditions are also easing.” THE NATION (THAILAND)/ASIA NEWS NETWORK