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Asian prices underperforming

New research has revealed that Asian mainstream residential property markets recorded only 1.9 percent annual price growth, lower than the global average of 3 percent.

Turkey, meanwhile, topped the chart and saw property prices rise by 18 percent during 2015 as the country is increasingly viewed as a safe haven for Middle Eastern investors.

In its Global Price Index research report for Q4 2015, real estate firm Knight Frank monitored and compared the performance of mainstream residential markets in 55 countries. The Index increased by 3 percent during 2015, up from 2.3 percent in 2014. Concerns over the global economy in 2015 failed to dent buyer confidence; instead the lingering low interest rate environment influenced sentiment.

A total of 43 of the 55 housing markets tracked in the Global House Price Index saw prices rise, up from 10 countries in the aftermath of the Lehman’s collapse in September 2008.

The company noted that Belgium and New Zealand were the least affordable countries when house prices are compared to incomes. Ukraine and Greece were the weakest housing markets in 2015, recording prices falls of 12 percent and 5 percent respectively.

Nicholas Holt, Head of Research for Asia Pacific, said: “Last year saw Asian mainstream residential markets recorded only 1.9 percent annual price growth, lower than the global average of 3 percent.

“While a number of markets experienced positive growth, Taiwan and Singapore, which have seen negative growth for a number of quarters, were joined by Hong Kong this quarter, which saw its residential market decline by 3.7 percent during Q4 2015.

“While long-term growth prospects remain positive, the continued economic uncertainty in the region is likely to weigh on housing market sentiment in the near term.”

Kate Everett-Allen, Partner, International Residential Research, Knight Frank, added: “Although house prices in Hong Kong increased in 2015, the rate of growth has slowed significantly from 17 percent in the year to September, to 7 percent in the year to December 2015. The slower rate of growth is attributable to rising supply (more than 11,200 homes were completed in 2015), as well as China’s financial market volatility and the expectation of increasing interest rates.”

Data from China’s National Bureau of Statistics shows house prices rose marginally in 2015 (0.4 percent) having reached their peak in the first quarter of 2014. Cities such as Shenzhen and Shanghai continue to outperform the national average due in part to favourable government policies and strong demand in first-tier cities.

Australasia was the strongest-performing world region in 2015, buoyed by the strong performance of New Zealand and Australia, both of which saw annual price growth in excess of 10 percent.

Housing affordability, or the lack of it, is rising up policymakers’ agendas worldwide. According to the latest data from the OECD, which measures house prices against incomes for 24 of its 34 members, Belgium and New Zealand are currently the world’s least affordable markets, whilst home ownership is most accessible in South Korea and Japan.

Everett-Allen said: “Our outlook for 2016 is muted. We expect the index’s overall rate of growth to be weaker in 2016 than in 2015. The global economy is experiencing a potentially dangerous cocktail of low oil prices, a strong dollar and a continued slowdown in China.”