Battling the waves

In our latest August Bulletin, we found that the recovery momentum for Asia-Pacific residential markets remained on track as lockdown restrictions have been gradually eased. This has led to a firmer recovery in transaction activity in July compared to the previous two months, according to our internal sentiment survey, see below. As well as the easing of restrictions, activity is being driven by a multitude of factors such as the low interest rate environment and the release of pent-up demand.

Knight Frank broker sentiment survey on residential markets

Source: Knight Frank Research

Whilst most of the Asia-Pacific markets have brought their infection numbers under control, mitigating any further economic pain, the resurgence of second and third waves in Vietnam, Hong Kong, Melbourne and Auckland has brought caution back into the region. This highlights the importance for governments to remain vigilant in their fight against Covid-19.

We expect housing demand to return and transaction volumes to improve in general across the region. However, the situation on the ground remains fluid and things could turnaround quickly if subsequent waves are not stamped out swiftly. Those residential markets currently facing renewed lockdown restrictions will inevitably be impacted over the near term, negating any positive momentum gained throughout their easing phase. As such, we maintain our cautiously optimistic outlook for the Asia-Pacific residential sector with residential prices to potentially decline around 5% this year.

More information on our sentiment survey can be found in our latest COVID-19 June Bulletin.

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