Home prices have begun falling in Sydney and Hong Kong, while values in Singapore barely rose last quarter, as buyers wary of rising interest rates and economic headwinds choose to sit on the sidelines.
Meanwhile, Covid-19 is adding to headwinds in China’s real estate markets. Hong Kong is contending with an exodus of residents following its botched effort to contain the latest wave, while a lockdown in Shanghai is dashing hopes of a quick recovery from a slump sparked by a crackdown on excessive debt at developers.
To be sure, demand may hold up in some markets, partly because a lack of housing stock is unlikely to be alleviated in the next 12 months, Garrett said. And with the rate-hike cycle still in its initial phase, there remains a window of opportunity for buyers to take advantage of still-conducive financing rates, she added.Buyers elsewhere haven’t been deterred. In the U.K., home prices climbed at the fastest annual pace since 2004 in March, while values across 20 cities in the U.S.
“A lot of it has to do with interest-rate talk, and Sydney, because it is such an expensive market, is very sensitive to talk about rate rises,” said Nerida Conisbee, chief economist at real estate firm Ray White. Waning competition at auctions “reflects the sentiment that has really changed towards the willingness of people to pay well above what the reserve price is.”Residential prices in Hong Kong have been trending down since August with no quick recovery in sight.
Authorities introduced cooling measures in December to address a lack of affordability along with the risk that households may struggle to pay their mortgages at higher rates. In February, the government announced higher property taxes targeted at wealthy residents, which could prompt some buyers in that segment to sit on the sidelines.