Intense competition and affluent buyers drive up Asia-Pacific home prices

Low interest rates, loose monetary policy, and uneven distribution of wealth have fueled the current boom 

According to CNBC, housing prices have surged across Asia-Pacific amid the pandemic due to record low interest rates.  

The real estate market also sees a positive outlook as vaccination rates accelerate, and some countries move into a post-COVID recovery phase.  

As property markets in some Asian cities start to overheat, it is widely anticipated that governments will intervene with cooling measures such as fiscal or monetary policies.  

Based on data from real estate consultancy Knight Frank, the top five cities with the highest year-on-year price increases as of the end of June are Wellington (29.2 percent), Auckland (25 percent), Beijing (14.8 percent), Singapore – outside central region (13.9 percent), and Osaka (13.5 percent).  

Victoria Garrett, head of residential Asia-Pacific at Knight Frank, said the annual growth across Asia-Pacific on average was at 6.4 percent year-on-year, the highest increase in four years.  

There’s been intense competition among homebuyers, resulting in bidding wars and exorbitant cash offers way beyond market valuations.  

Sean Coghlan, global director of capital markets research and strategy at JLL, said, “There are more prospective buyers than on-market opportunities, creating more intense bidding processes.”  

“Greater competition and the deep pools of capital targeting real estate are combining to drive up pricing,” he said. 

A Singaporean property agent described Asia’s housing market as being “on steroids.”   

All-cash offers are also increasing, generally for properties between SGD4 million (USD2.9 million) to SGD8 million (USD5.9 million).  

The boom can be partly attributed to low interest rates, loose monetary policy, and “uneven distribution of wealth” during the pandemic, said Regina Lim, head of capital markets research at JLL Asia-Pacific. 

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Analysts say that the demand for larger homes has spiked due to the work-from-home trend, but strong sales and pricing are seen across all residential unit types.  

“We expect residential sales and prices to remain buoyant in the near term,” said Koichiro Obu, head of real estate research for Asia Pacific at DWS.