Confidence wanes in Asian luxury homes market

By Investments
Confidence wanes in Asian luxury homes market

Confidence in the Asia pacific luxury homes market remains mixed as buyers and investors remain cautious over the continuing eurozone debt crisis, according to international property consultants CBRE.

Markets showed rises and falls, but no clear trend across the region in the survey for the second quarter of 2012.

Prices in Beijing, China, edged up 0.5% after six months in a row of drops – stimulus came from launching new projects and discounts from developers that enticed buyers that seemed to have been holding back from purchasing a home.

A few homes were available to rent, but demand is outstripping supply, with average rents up 1.1% from the first quarter.

Shanghai fared less well, with prices falling 1.2% and rents barely moving at 0.3% up.

Developers are pushing heavy discounts to encourage sales.

Hong Kong ends nine month slumps

In Guangzhou, apartment prices were up 0.9% and sales surged by 33%, but rents fell 1% as more new homes came to the market, but CBRE reckons demand will soon eat up the over supply and lead to further rent rises.

Luxury home prices were also up in Hong Kong – by 0.9% after a nine month slump. Rents increased 3% but the outlook for landlords is bleak as many international firms have put the brakes on expansion or are cutting housing allowances.

Outside of China, house prices in Singapore slipped 2.4%, the fifth quarter-on-quarter fall in a row as the government tightens mortgage lending and rules that let non-residents invest in property. The market is rebalancing from a speculator’s bubble to genuine homebuyers. Rents were up 1%.

Bangkok, Thailand, saw a 2.6% property price rise as demand keeps the market going forward.

Seoul, Korea, has a stalling market as a weakening economy hit demand. Sales were down 30% in some areas, while tax incentives and first time buyer deals are failing to kick start the market. CBRE forecasts prices will continue to fall.

Demand remains subdued

Although prices fell 0.1% in Kuala Lumpur, Malaysia, the market seems stable despite banks imposing stricter lending guidelines. Rents were also down 2.4% as expat demand fell away. CBRE believes rents will recover as local demand for renting takes over from expats.

Ho Chi Minh City, Vietnam, also returned stable figures, with little change in prices or rents. Average prices are expected to fall as developers consider discounts to stimulate sales. many new projects are expected to face delays until 2013 as developers try to match supply to demand to maintain property prices.

“The worsening eurozone crisis and weaker economic growth in Asia, especially China, do not bode well for the luxury market in Asia,” says the CBRE report.

“Demand is likely to remain subdued and buyers and investors may prefer to stay on the sidelines and defer purchase plans. As demand continues to soften, luxury residential prices and =rents will weaken in the coming months.

“Sales may witness a slight improvement in many markets as developers continue to offer price discounts to attract buyers. This will lead to more bargain hunting by buyers across the region.”

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