Average residential price growth within Asia-Pacific stands at 5.6% in H1 2022

This report tracks the movement of average residential prices within the Asia-Pacific region across 23 cities.

The average year-on-year (YoY) residential price growth within Asia-Pacific in H1 2022 stands at 5.6%. 19 out of the 23 cities tracked recorded positive annual price growth in H1 2022.

“While the accelerated normalisation of monetary policy across much of the region will generally soften prices in residential real estate, the extent to which this will happen will vary significantly across the region. The position in the market cycle remains a crucial determinant and we can expect just a few markets to be more sensitive to higher interest rates in the current hiking cycle. Homes in the high-to-luxury end of market will also remain on an uptrend, as buyers are less price sensitive and view homes as an indication of status and part of an enduring legacy," said Victoria Garrett, head of residential, Asia-Pacific.  

“With the majority of homeowners likely to be loaners amid the strong run-up in prices, the Australian and New-Zealand markets can be expected to experience a more pronounced correction. It also does not help that the last time interest rates rose in Australia was over a decade ago – in late 2010 – and its end after such a protracted period will likely require some getting used to. Households will need to dig a little deeper to get around their finances. However, we believe the depth of a correction, if any, will remain manageable. Demand for residential investment in Australia, a key safe-haven market, will remain supportive of prices. Moreover, inflationary pressures in the region are unlikely to approach the levels seen in Europe and the US. So, while interest rate hikes will be front-loaded, the pace and duration can be expected to be more calibrated. For the rest of the markets, prices will remain resilient. Hong Kong’s prices have softened due to pandemic restrictions, in addition to higher interest rates while the string of cooling measures has weakened price-interest rate links in Singapore; those in Tokyo, at worst, will remain stagnant," adds Christine Li, head of research, Asia-Pacific.  

Key highlights of The Asia-Pacific Residential Review H1 2022

Malaysia: The outlook for Kuala Lumpur and Penang’s housing markets is improving. Despite the index falling by 1.3% and 0.3% YoY, it showed good improvement with more developers putting their launches on the market on the back of better take-up rates registered in recent months.

Thailand: The condominium market in Bangkok also improved in 2022 due to the dramatic supply increase in the market during the first quarter of the year, signalling that developers are launching more new projects in contrast to last year’s slowdown.

New Zealand: In New Zealand, home prices have started to fall following central bank’s move to tighten monetary policy at a faster pace to cope with high inflation, ending a two-year price surge on the back of record low interest rates. Although Wellington’s overall residential index registered 1.2% growth YoY, the market is increasingly facing a downward price pressure in the near future.

Australia: Sales volume in Australia started to taper back in the past quarter despite the three interest rate hikes as the impact on residential mortgage repayment has been minimal.

China: Despite China registering positive growth YoY ranging from 0.9% in Guangzhou and 5.9% in Beijing, the full-year growth in 2022 might be more moderate at between 2-3%, given that the country’s economy has been hard hit by the worst COVID outbreak in 2022, resulting in economists lowering China’s full-year forecast to closer to 3%.

India: While India’s H2 2021 saw sales volumes come within reach of a six-year high, sales in H1 2022 have reached the highest level since H1 2013. Overall residential indices for Delhi, Mumbai and Bengaluru are up by 6.5%, 6.1% and 8.9% YoY respectively, making them the best showing after several years in the downcycle.

Discover how the post-pandemic landscape is shaping the residential price growth across Asia-Pacific cities in greater depth by delving into Knight Frank’s Asia-Pacific Residential Review Index for H1 2022 via the link here.