PETALING JAYA (Jan 21): Despite the Covid-19 pandemic’s toll on economic activity in the recent months, the general outlook for the region remains optimistic, says Knight Frank in its latest Asia Pacific Residential Review 2H2020 report.

According to Knight Frank head of residential Asia-Pacific Victoria Garrett, a gradual rebound was witnessed in most of the Asia-Pacific cities tracked in 2H2020. 

“Moving forward, we hope to see the residential markets stabilise as housing demand and prices bounce back to pre-Covid levels,” said Garrett.

In 2H2020, Asia-Pacific residential markets saw 14 of 24 cities recorded either stable or increased annual price growth, with a year-on-year (y-o-y) average price increase of 1.9% — up from 1.4% in 1H2020, the report said.

Low interest rates have been the main driver behind this, said Knight Frank Malaysia associate director of international residential project marketing Dominic Heaton-Weston. “[The low interest rate environment] has buffered the weakening economic environment stemming from the aftershocks post Covid-19’s peak around the middle of the year in Asia-Pacific."

“Resilience in economies and residential markets will depend on the smooth implementation of an extensive vaccine rollout in 2021 and support measures from governments,” he added.

According to Knight Frank’s report, Singapore’s residential market is expected to remain steadfast in 2021 on the continued combination of low interest rates, low household leverage, and a gradual economic recovery; all of which act as a floor to any further price decline in 2021. 

In 2H2020, the city-state saw house prices fall 0.2% y-o-y in its central core region, whereas in the rest of the central region, prices rose 5.1% on better-than-expected demand seen post the city-state’s Circuit Breaker between April to June 2020.

As for China, Knight Frank is expecting the Chinese Mainland economic recovery to be in full swing in 2021 with housing demand likely to return to pre-Covid levels. New home prices across Tier-1 capital cities of Beijing, Shanghai, Shenzhen and Guangzhou rose 3.9% y-o-y in 2H2020, accelerated from the 2.8% annual rise recorded in 1H2020. 

“Prices in China have remained relatively stable in 2H2020 as housing demand returned on the back of the country’s economic recovery, while at the same time weathering some policy tightening measures by regulators who sought to prevent further bubbles from forming,” the report said.

Australian house prices grew in 2H2020, recording a 1.3% mainstream growth year-on-year across Sydney, Melbourne, Brisbane and Perth. According to the report, Perth recorded a 3.7% annual price growth, the highest among its peers as mining activity remains resilient through the pandemic. “With a low interest rate environment expected for the next three years and generally limited new stock coming on line across its major capitals, house prices are expected to remain resilient in 2021,” the report said.

In the Indian market, residential sales jumped by 60% compared to the first half in the country’s top eight cities as developers offer flexibility on price and payment terms complemented by proactive policy interventions in cities like Mumbai and Pune.

However, India’s three major markets — Mumbai, NCR Delhi and Bengaluru — recorded a decline in house price by an average -2.7% y-o-y in 2H2020. Nonetheless, Knight Frank foresees 2021 to be a good year for the Indian market. “With lower residential price level and multi decade low home loan interest rate pushing affordability to its best level in many years, 2021 is likely to be a strong year with the tailwinds of a strong economic growth.”

In Bangkok, condo prices fell 3% y-o-y during the period on weak demand resulting from the city’s ongoing political uncertainty and the battered tourism reliant economy. According to Knight Frank, the Thai government could announce more policy easings this year, which should have a net positive effect on the market.