17 out of 24 APAC cities register positive annual price growth in Q3 2022: Knight Frank | The Financial Express

17 out of 24 APAC cities register positive annual price growth in Q3 2022: Knight Frank

The rise in near-term interest rate expectations means a price reversal will be widespread across several regional key markets.

17 out of 24 APAC cities register positive annual price growth in Q3 2022: Knight Frank
Despite the hikes in the interest rates, rising cost of living and recession fears, home buyers seek value buys in the market.

Most residential markets in APAC (Asia-Pacific) remained stable despite interest rate rises. According to the Knight Frank Asia-Pacific Residential Review, 17 out of 24 cities tracked by Knight Frank registered positive annual price growth in the third quarter of 2022. This is down from 19 cities in Q2 2022. The average price growth for the region also slowed from 5.7% to 2.8% year-on-year (YoY), which confirms the housing market in the region has started to cool after the pandemic boom.

The rise in near-term interest rate expectations means a price reversal will be widespread across several regional key markets. The correction in home prices is reflected by slower sales volumes, given markets such as Hong Kong SAR and some Australian cities have fallen by about 22% and 16%, respectively, quarter-on-quarter (QoQ).

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The continued recovery of the Asia-Pacific residential markets is underpinned by positive business sentiments, the re-opening of the economy and a strong labour market post-pandemic. Despite the hikes in interest rates, the rising cost of living, and recession fears, home buyers are generally not deterred by the cloudy outlook and seek value buys in the market.

19 out of 23 cities tracked by Knight Frank are registering positive annual price growth in the first half of 2022. This is down from 21 cities at the end of 2021. The average annual growth stands at 5.6% year-on year (YoY), which shows a more moderate growth as compared to six months ago.

Rising interest rates have taken its toll on the market in Auckland, New Zealand, where the annual growth rate registered its first contraction since June 2019. Kuala Lumpur and Penang have both been on the mend, registering smaller declines as compared to H2 2021.

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With much of the interest rate hikes likely frontloaded, the pace of increase is expected to slow in 2023. Much will depend on the Federal Reserve’s (Fed) reaction function. While inflation is not likely to reach the levels seen in the US and Europe, the region remains vulnerable to capital outflows which an excessively strong greenback can induce.

A year into post-COVID, the residential sector is feeling the pinch of rising mortgage rates. While the market has not experienced any notable correction yet, homebuyers are finally taking a breather by adopting a wait-and-see attitude amid rising mortgage rates and an elevated inflationary environment.

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First published on: 07-12-2022 at 09:35 IST