In Q3 of 2022, 17 out of 24 APAC cities record positive yearly price rise

Despite increases in interest rates, most residential markets in APAC (Asia-Pacific) remained steady. The third quarter of 2022 saw a positive yearly price rise in 17 of the 24 cities studied by Knight Frank, according to the Knight Frank Asia-Pacific Residential Review. Compared to Q2 2022, 19 cities are now less. The average price growth for the area also decreased from 5.7% to 2.8% year-over-year (YoY), confirming that the region’s housing market has begun to cool following the epidemic boom.

A price reversal will be prevalent across numerous regional major markets as a result of the increase in expectations for short-term interest rates. Given that markets like Hong Kong SAR and some Australian cities have decreased by roughly 22% and 16%, respectively, quarter-over-quarter, the correction in housing prices is reflected in slower sales volumes (QoQ).

Positive business sentiment, the reopening of the economy, and a solid labour market following the pandemic serve as the foundation for the ongoing recovery of the Asia-Pacific residential markets. Despite interest rate increases, increased living expenses, and worries about a recession, buyers of homes are typically unaffected by the gloomy outlook and look for bargains on the market.

In the first half of 2022, Knight Frank is tracking 23 cities, and 19 of them are showing positive yearly price rise. The number of cities is decreased from 21 at the end of 2021. In comparison to six months earlier, the average annual growth is now 5.6% year-over-year (YoY), which indicates a more moderate rise.

The market in Auckland, New Zealand, has been negatively impacted by rising interest rates, with the annual growth rate showing its first decline since June 2019. Both Kuala Lumpur and Penang have recovered, showing lesser reductions than in H2 2021.

The pace of increase is anticipated to slow in 2023 because the majority of the interest rate increases are probably frontloaded. The reaction function of the Federal Reserve (Fed) will be crucial. The region remains susceptible to capital outflows that an overly strong dollar can cause, even though inflation is unlikely to reach the levels seen in the US and Europe.

The home sector is suffering from increased mortgage rates one year after COVID. Homebuyers are finally taking a break by adopting a wait-and-see attitude in the face of rising mortgage rates and a high inflationary environment, even though the market has not yet undergone any notable corrections.