Property markets across Asia can expect further regulations in the coming months, as authorities attempt to curb rising housing prices without causing a crash.
Last week, the Hong Kong government announced its fifth batch of measures for this year, as the city-state struggles to curb speculation in the property market. China, Malaysia, Singapore, Taiwan and Thailand have also announced stricter regulations in recent months.
However, the appetite of Asian investors for property appears far from sated with prices continuing to soar. This will likely prompt authorities to increase land supply, raise mortgage requirements and even impose property taxes.
“My baseline scenario is we will need more measures – the current set worked but their impact is transitory,” said Tim Condon, research head at ING Financial Markets in Singapore.
The ability of authorities to curb speculation is being stalled by the reluctance of central banks to raise interest rates too fast, as well as by the abundant liquidity in the market.
Many investors are coming to the market flush with cash, which means that measures such as placing a cap on mortgages relative to the property’s value are not as effective as usual.
Luxury home prices in Hong Kong are now above the 1997 peak, partly fuelled by rich mainland Chinese buying flats in the city.
Hong Kong residential prices soared 25 percent from mid-2009 to mid-2010, while Singapore’s surged 37 percent, said property agency Knight Frank.
Hong Kong, Singapore, Taipei and various Chinese cities are considered the areas that are still most vulnerable to an increase in pricing pressures.
Hong Kong will likely give its latest measures some time to take effect prior to introducing some more measures next year.
Singapore has suggested that it will likely implement more measures and release more land into the market, as well as announce more measures to curb speculation.