Asia continues to lead the global real estate market recovery, but government intervention in heated regional property markets appears to be having the desired cooling effects.

Average prices in Asia saw a 14 per cent increase according to the latest Knight Frank Global House Price Index. Prices increased in 69 per cent of worldwide locations in the year ending June, up from 19 per cent a year earlier. The second quarter of the year is the second consecutive quarter where the average annual growth for all global locations has risen, up by 3.9 per cent.

city skyline Asia
Asia’s top performers were Singapore, China and Hong Kong however quarterly growth rates suggests these heated markets are starting to cool.

“Each quarter we are presented with further evidence that the impact of the global recession on the world’s housing markets is diminishing,” said Liam Bailey, Head of Residential Research at Knight Frank.

“The performance of the global housing markets can still easily be grouped by world region with the Asia Pacific countries occupying the top of the table and the European economies the bottom. However, sub-divisions within these groups are starting to emerge. In Asia for example, the housing markets of Singapore, China and Hong Kong are clearly outperforming their neighbours in India,  Indonesia and Japan which are ranked in positions 26, 29, and 42 respectively. In Europe too, there is a clear divergence with the Nordic countries recording annual growth of between 8 and 11 per cent and most of their Baltic and Southern European counterparts experiencing negative growth.”

Apart from Asia Pacific’s strong performers, South Africa and Canada represent some of the most heated housing markets recording annual price growth of 14.8 per cent and 13.5 per cent respectively. “There is speculation as to whether Canada’s housing market is entering bubble territory, mindful of this the government has already raised the base rate on three occasions this year and has reduced the maximum allowable amortization period from 40 years down to 35 years,” explained Bailey.

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Asia leads the way as cooling measures start to impact

Thailand Real Estate Outlook

Neither India nor South Africa issued any travel warning during the recent red shirt demonstrations. They obviously felt their citizens were responsible enough to determine whether they should travel to Thailand and knew how to safeguard their personal safety _ a refreshing approach compared to certain countries that effectively declared all of Thailand including places such as Phuket and Koh Samui off-limits to their citizens.

A new and better-calibrated approach to issuing travel warnings is especially timely, given the increasing frequency of civil disturbances around the world. For example, we have seen labour protests in Greece in May and the G20 riots in Toronto in June _ despite the violent nature of these protests, no blanket travel warning was implemented on either Greece or Canada.

Although the current outlook for Thailand property has taken a knock and the current political situation needs to be followed closely by potential Thailand property investors, the country’s property market should not be overlooked.

Thailand is member of the ASEAN (Association of Southeast Asian Nations) trade bloc and has free trade agreements with India and China, two fast-developing economic powerhouses. Consequently, many multinational companies are using the country as a regional base for its operations or a place to station employees who travel around Asia. Foreign investment in Thailand is constantly expanding, supporting the strong economic growth of the country.

Many Real estate developers in Thailand have developed and implemented market research technologies and monitor the market closely.

Thailand’s property market was able to rebound from past crises and there is every reason to believe it will be able to absorb the blow of recent political tensions. The taxation situation has actually improved the conditions for purchasing property in Thailand, and if property prices do dip slightly as a result of the current situation it may actually be a good time to buy as there is a very real possibility Thailand property will regain its golden outlook soon. As a result, the financial condition of most major housing developers in Thailand is much more robust than in the past. The development of the local bond markets and increasing domestic savings has the made the industry much less dependent on foreign funds, a significant difference from 1997.

Small developers will react immediately to the negative consumer sentiment by reducing new housing construction, providing larger developers an opportunity to gain market share in the Thai real estate market for 2009. Large development companies with strong reputations, strong balance sheets, and higher operational efficiencies will the first to benefit once the market turns around.

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