Growing prices of residential properties in Asia may cause mini real estate bubbles and stimulus packages from governments may be pulled out to cool down the market.
Finance ministries and central banks in several countries like Singapore and China are discussing and setting up measures to prevent the upward trend of property prices.
Prices of residential properties in Singapore have climbed 15.8 percent in Q3 from Q2, the first such increase in more than a year. Demands in the market are evidently increasing. Several home buyers are keen in securing apartments so they allow their property agents to fill up their blank checks while some patiently queue for hours during new launches.
In China, average prices have increased by 37 percent from the previous year. The recent analysis from Credit Suisse shows that almost all major cities in China have experienced property price increases from 26 to 96 percent in their new home sales within 12 months.
The China Banking Regulatory Commission wants to cut leverage at large state-owned companies that have entered the market and developers that have purchased lands at extravagant prices. There are claims that a number of developers borrowed a lot of money. Experts believe this can threaten to cause an increase in delinquent debts if property prices begin to collapse. The Singapore government has already taken measures, including shutting down bank lending programmes that permitted home buyers to delay their payments on developments that are yet to be completed. Other measures may have to be considered should this action fail to work.