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Price rise of Asian luxury homes easing

Tuesday 23 August 2011

Buyer sentiment weakens in Q2 amid further tightening measures: CBRE

GROWTH in luxury home prices across Asia began to ease in the second quarter of 2011 as buyer sentiment weakened amid further tightening measures, said a new report from CB Richard Ellis (CBRE).

Tightened mortgage lending and rising interest rates also hit buyer demand in most Asian markets, the property firm added.

The CBRE Asian Luxury Residential Capital Value Index rose by 2.5 per cent quarter on quarter in Q2 2011, lower than the rise of 5.5 per cent quarter on quarter recorded in Q1.

'Interest rate hikes, tightening credit availability and general uncertainty over the global outlook are all beginning to impact on Asia's residential market,' said Nick Axford, executive director and head of CBRE Research for the Asia-Pacific region.

'Whilst luxury residential sales are less affected by some of these issues than other segments of the market, rising concern over the outlook for prices is likely to deter some speculative investment with a consequent impact on trading volumes and value growth.'

Price appreciation in Hong Kong moderated to 8.9 per cent quarter on quarter from 14 per cent in the first quarter, although the rate of growth remained the fastest in the region.

In Singapore, luxury home prices fell 1.7 per cent quarter on quarter in Q2. No new luxury residential projects were launched during the second quarter as existing projects continued to struggle to attract buyers, CBRE said.

On the leasing front, the CBRE Asian Luxury Residential Rental Index rose by 1.8 per cent quarter on quarter in the second quarter.

Hong Kong registered the strongest rental growth in the region at 7.3 per cent quarter on quarter, thanks to strong leasing demand from expatriates.

Rents in Singapore declined 1.9 per cent quarter on quarter due to the large stock of projects that were completed and are now available for rent.

Concern over the potential introduction of new tightening measures in China, Singapore and Hong Kong may further restrain capital value growth in the coming months, CBRE said.

'Whilst the medium- term fundamentals for the sector remain healthy, the ongoing volatility in the global environment and concerns over the short-term outlook could have a softening effect on the market in the coming months,' said Mr Axford.

Source: The Business Times