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Asia's Hottest Property Market

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By 27.09.2010

There's nothing poor about Singapore's property market right now.

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Residential housing prices climbed an astonishing 38.1% over the last year, according to the Global Property Guide, fueled by a barrage of wealthy mainland Chinese buyers looking to take advantage of the region's robust recovery and low interest rates to turn a profit in an Asian financial hub.

The market's been on the rise for a while. Built-up demand drove private real estate prices to their largest quarterly hike in history at the end of 2009, which "came on the back of eight consecutive months of brisk sales," says Tay Huey Ying, director for research and advisory at Colliers International.

For these reasons, Singapore tops the list of Asia's hottest property markets, which was determined using data on year-over-year changes house prices from the Global Property Guide, a research house and website. (The time frames for data vary by country because the guide uses the most recent available for each place.)

Following Singapore is Hong Kong, another financial hub that places relatively few restrictions on foreign buyers, so it too attracts an influx of cash-rich mainland Chinese investors who have buoyed prices. The annual growth in housing prices is 24.5%.

Next in the ranks are Taiwan, Australia and China, with 20%, 18.4% and 8.6% growth respectively.

The Global Property Guide collects its information using in-house research, information from accountancy and law firms, and central bank and national statistical data. It tracks real estate statistics for upscale parts of major cities, from the annual house-price figures we used to rental yields to property tax levels. Areas in Asia-Pacific countries that the guide analyzes includes Hong Kong Island and the central residential neighborhood of Boeung Keng Kang in Phnom Penh, Cambodia--places where at least moderately well-heeled professionals live, be they expatriate or local.

"Can foreigners buy property? Is property expensive or cheap? How much rent can you earn?" writes Matthew Montague-Pollock, Global Property Guide's publisher, on the company's website. "The best stock investors use a 'fundamental analysis' perspective, which looks at investment from the point of view of risk and return. We want to bring a similar perspective to international residential investment."

The outlook for Asian property prices is still robust. But as prices rise and governments react with a series of dampening measures, it'll be difficult for the statistics to keep up the pace. Earlier this month Singapore imposed several strict rules to slow the growth of property prices, including one that makes it harder for people who already have a mortgage to borrow for a second home and another that imposes a stamp duty if people buy and sell within three years. Singapore's government, notorious for its interventionist tendencies, is also building more public housing, increasing supply to ensure that it stays affordable.

Hong Kong too has implemented measures to crimp property prices, such as raising down payments for luxury apartment loans and pledging to increase the supply of housing. Senior Hong Kong officials like the monetary authority chief and financial secretary have been vocal about their worries over a real estate bubble.

Despite all that, a recent Knight Frank study showed that Hong Kong home prices are likely to top all other world cities in growth next year.

"Residential supply is expected to remain limited, lending support to residential prices… The ultra-low mortgage rate environment in Hong Kong is likely to remain for at least another 18 months," according to other Knight Frank data provided by Xavier Wong, research director for greater China. "This trend is expected to linger and the continued inflow of capital from China is expected to sustain demand for homes in Hong Kong, lending further support for home prices."

As for the world's fastest-growing property market, expects say it will also prove resilient in spite of government initiatives to slow it down.

Says Colliers' Tay: "In light of the bright prospects seen for Singapore's economy in 2010, private home prices are unlikely to retreat although the pace of growth is likely to continue to moderate and stay within the 5% per quarter range given the ramped-up supply."


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