Singapore has been ranked fifth in the latest Global House Price Index released by Knight Frank, registering a 10.5 percent year-on-year growth in home prices.
Meanwhile, Asia has been named the best-performing continent, with Asian countries taking four of the top five spots, registering an annual growth rate of 8.4 percent.
Hong Kong was the strongest performing country, recording a 24.2 percent growth in home prices while its government is battling to curb the market. This was followed by India and Taiwan, which saw a total annual growth of 21.9 percent and 14.3 percent respectively.
“Price growth, while not stalling, has faltered in Q1 2011, pointing to ongoing problems underlying the world’s housing markets. In Q4 2010 overall annual price growth stood at 3.3 percent. Three months later this shrank to 1.8 percent,” said Liam Bailey, Head of Residential Research at Knight Frank.
He noted that the Asian government’s efforts to curb home price inflation in the past year have been successful, “although the latest figures suggest Hong Kong’s housing market is proving less responsive.”
Demand from mainland China is a key driver for the Hong Kong property market, accounting for nearly one in four property purchases. By comparison, the Chinese market has experienced annual growth of 8.4 percent, compared to 49 percent in the first quarter last year.
“Additional measures are being adopted by the Hong Kong government to curb inflation by launching a new mortgage database,” said Bailey.
Banks may refuse mortgage applications, lower loan-to-value ratios or offer higher mortgage rates if applicants do not share their mortgage data. Such a move is expected to further suppress speculative activity, as speculators tend not to disclose their mortgage histories, because it can limit the acquisition of multiple flats.
Globally, the 1.8 percent increase in home prices was attributed to poor performance in the first quarter, with nearly 50 percent of countries experiencing flat or negative growth compared to 38 percent a year ago.
“We expect to see the current slowdown in global housing markets to continue, hitting a low point in Q4 2011 – assuming the Asian markets continue to cool and the government intervention is successful – but with a slow recovery in global house prices taking place in 2012,” Bailey said.
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