Tightened mortgage lending and rising interest rates continued to impact on buyer demand in most Asian markets in the second quarter of 2011.

Buyer sentiment weakens amid further tightening measures

Concern over the regional economic outlook rose as the economic situation in the United States and Eurozone worsened in July, and further deterioration could have a knock on effect on the Asian economy.

Transaction volume remains generally stable

Trading volume in Shanghai and Hong Kong declined on a q-o-q basis in the second quarter whilst activity in Singapore remained steady.  Southeast Asian markets displayed mi xed results, with Ho Chi Minh City recording a significant fall in completed deals.

via CBRE Thailand Asia Luxury Residential MarketView Q2 2011.

Price appreciation begin to ease

The CBRE Asian Luxury Residential Capital Value Index rose by 2.5% q-o-q in the second quarter compared to a rise of 5.5% q-o-q recorded in the first quarter. In Hong Kong price appreciation moderated to 8.9% q-o-q from 14.0% in the first quarter, although the rate of growth nevertheless remained the fastest in the region. Capital value growth eased in the most first-tier cities in China following the implementation of further restrictions on home purchases. Prices in Bangkok and Ho Chi Minh were static as demand from end users was dampened by more stringent mortgage policies.

Prices to remain stable

Luxury home prices in Asia are expected to remain stable over the remainder of 2011 although some markets could witness a slight decline. Buyer sentiment is expected to continue to weaken in the face of further interest rate hikes and the tightening of credit, which will put greater downward pressure on home prices. Concern over the potential introduction of new tightening measures in  China, Singapore and Hong Kong may also restrain capital value growth.