Diverse Regional Housing Options: A Snapshot of Choices in Asia-Pacific
The Asia-Pacific region is characterised by a dynamic and diverse housing market, marked by high home ownership aspirations amid persistent constraints in housing supply and sustained economic growth.
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As the middle class expands—projected to reach 3.5 billion people by the end of the decade—housing demand in emerging markets continues to rise. This growing demographic is bolstered by sustained wage growth; real wages in the Asia-Pacific rose by 1.8% in 2023, with projections of a further increase of 2.2% in 2024, outpacing global trends according to ECA International's latest Salary Trends Report.
The region's economic diversity has led to a variety of housing options. Safe-haven markets like Singapore and major Australian cities offer stability, while Southeast Asia presents growth opportunities with varying residential prices even within prime segments. Although foreign investment has cooled due to interest rate hikes and regulatory measures, government initiatives aimed at stimulating property markets have partially countered this decline. Additionally, visa schemes targeting global talent and digital nomads have contributed to residential property demand. The downturn in the Chinese mainland's property market has also influenced regional investments. While Chinese buyers are becoming more selective, they continue to favour stable markets like Australia. Moreover, the depreciation of the yen has sparked interest in Japanese real estate, while Taiwanese investors have increasingly entered Australian markets. This article provides a comprehensive overview of the current housing landscape across Asia-Pacific, highlighting key trends, price movements, and rental dynamics.
Chinese mainland buyers were the largest group investing in Thailand and Australia
In 2023, foreign buyers remained active in residential property markets across various Asia-Pacific countries. Notably, Chinese mainland buyers were the largest group investing in Thailand and Australia. Data from Thailand's Real Estate Information Center (REIC) indicates that foreign purchases increased by 25%, with over 45% attributed to Chinese investors. Efforts to lower transaction costs are expected to sustain foreign interest in Thailand's real estate sector.
Resilience of prime residential prices
Asia-Pacific's prime residential sector has proven resilient against economic challenges such as the pandemic and rising interest rates. Prime residential prices rose by 2.9% year-on-year (YoY) in Q3 2024, marking six consecutive quarters of price increases across 14 out of 23 monitored markets. Notably, Australian cities have seen a consistent uptrend in prices due to a predominance of cash buyers who are less reliant on financing.
The interplay between stock and real estate markets is evident; while rate hikes have generally suppressed real estate prices since 2022, several markets have outperformed their stock counterparts. For instance, Tokyo's residential prices surged alongside its stock market reaching an all-time high this year (which is also the case for Mumbai).
Rental market dynamics
In Q3 2024, prime residential rents across Asia-Pacific grew marginally by 1% YoY, a stark contrast to the nearly 11% increase recorded in the same quarter of 2023. Despite this downturn, rents remain approximately 8.0% higher than Q4 2022 levels. Sydney exemplifies this trend with a staggering rent increase of 23.1%, driven by record net migration and limited housing supply.
The current rental landscape suggests that elevated funding costs will continue to deter buyers, thereby increasing competition in the rental market. These conditions are expected to persist as central banks are likely to delay rate cuts.
Outlook for Asia-Pacific housing markets
Looking ahead, with the Federal Reserve entering an easing cycle, residential prices in the Asia-Pacific are anticipated to maintain an upward trajectory into 2025. Although challenges from the Chinese mainland and Hong Kong markets may weigh on overall regional performance short-term, recent policy shifts aimed at reducing stamp duties and relaxing home-buying restrictions could stabilize prices within prime segments.
In conclusion, while diverse regional housing options exist across the Asia-Pacific—shaped by economic conditions and demographic trends—the interplay between home ownership aspirations and market dynamics continues to define this vibrant sector.
For more insights, please download the latest edition of Knight Frank’s Asia-Pacific Horizon series, Quality Life-ing: Mapping Prime Residential Hotspots, report below.