• Exceptionally easy monetary policy has fuelled asset price boom in the region, with equity markets trading at record valuations and property markets strengthening in a number of economies.

• Property markets in China, Hong Kong SAR, South Korea, Singapore, and Taiwan have been buoyant

• China’s credit market distress may cause property prices to fall…

• …but so far, affordability metrics show Chinese homes as some of the most expensive in the world

• Affordability metrics have worsened in Singapore as well

• These markets are vulnerable to higher rates; current prices may well be as good as it gets

Key data release and events this week:

• Bank Indonesia is expected to hold the policy rate at 3.50%.

• Japanese exports are expected to slow to about 10% YoY in September, down from 26.2% in August.

• Malaysia’s CPI inflation likely picked up modestly to 2.2% YoY in September.

Commentary: Property price trends in Asia

Exceptionally easy monetary policy, in place since the beginning of the pandemic in early-2020, has played a major supportive role for the global economy. Low rates and ample liquidity have staved off a likely credit crisis and resulting economic distress, but they may have also contributed to ballooning asset prices that tend to exacerbate inequality. With the exception of China, regional equity markets are trading at historically high valuations, while despite the uncertainties around the pandemic and
economic outlook, residential prices are been rising in most parts of the continent.

Latest available data show that property markets in China, Hong Kong SAR, South Korea, Singapore, and Taiwan have been buoyant. Recent credit stress may take the sail away from China’s property markets, but prices are still some of the highest in the world, when considered in relation to income. Affordability metrics have worsened in Singapore as well. At the other end of the spectrum, Malaysia, Thailand, and the Philippines have seen some market weakness.

Singapore publishes detailed data on various segments of the property market, which provide valuable insights. Work-from-home
and mobility restrictions have kept the dark cloud of uncertainty hovering over Singapore’s office and industrial spaces, while not much momentum in seen in the shop spaces. In sharp contrast, the residential market has been strong over the past year, with robust sales volume and rising prices. With rates beginning to rise, how long will this last?