Mediocre rise in high end prices

Posted by Hipflat 26 Feb 2017

Healthy demand from locals and foreigners will drive demand in Bangkok's luxury market, according to new research from real estate firm JLL, but large supply and the possibility for further launches may test the limits of demand.

Prices at the top end of the Bangkok market rose by a mediocre 1.2 percent in the three months ending December, compared with the previous three-month period. Year-on-year the rise in Bangkok's top-end prices was reported as 2.9 percent in JLL's research report.

Elsewhere, luxury residential markets in Asia Pacific saw a mixed price performance in Q4 16. Of the eight featured markets, five markets saw price growth above 1 percent quarter-on-quarter, while price declines in Singapore abated.

Generally limited price growth

A series of tightening measures introduced in Beijing and Shanghai had an immediate impact on the market. However, slower sales momentum was in part due to less new supply as local governments reportedly withheld pre-sales permits to control prices.

Homes sales in Hong Kong slowed following the introduction of a flat 15 percent stamp duty as most buyers took a wait-and-see approach, while developers reassessed their sales strategies.

Singapore's prime districts showed further signals that the residential market may be in the early stages of a recovery with Q4 16 sales volumes rising from the same period a year earlier. Full-year 2016 volumes were also notably higher than the levels recorded in the previous two years.

In Jakarta, many factors that were contributing to weak sentiment in the condominium sales market have improved; however, it may take several quarters of stability for this to flow through to improved sales.

Demand remained strong in Manila driven primarily from overseas Filipinos and expat employees which are benefitting from the continued growth of the outsourcing and offshoring (O&O) sector.

On a year-on-year basis, Shanghai and Beijing continued to show the strongest price growth with double-digit gains, while prices in Singapore were slightly below end-2015 levels.

Tight policy stance to persist

The housing policy stance of many governments across the region is likely to remain tight in the short term as stabilising market conditions and limiting price growth remains a political priority.

Governments in Beijing and Shanghai have been vocal about their intentions to control price growth and strict implementation of the cooling policy is expected. Rising interest rates, new supply and uncertainty surrounding the Chief Executive elections later this week in Hong Kong are likely to put a dampener on the near-term outlook.

In Singapore, more realistic pricing and growing sentiment that the market is nearing a bottom is likely to spur demand. However, the clouded economic and interest rate outlook is likely to temper a quick recovery.

Uncertainty surrounding the economy, housing policy and interest rates are likely to present challenges in many markets across the region and potentially limit price growth.

This story was written by Andrew Batt, Head of Content at Hipflat,com. Contact him with your own news, views and comments at [email protected]