Asia's Real-Estate Markets Show Signs of Cooling

By JASON CHOW

Measures taken last year by Asian governments to cool their countries' property markets are proving effective, according to a study by real-estate firm Knight Frank, though the intended slowdown is coming at a time when the global economy is hitting the brakes.

"These huge booms that we saw from 2009 to 2011 are coming off now," said Nicholas Holt, research director at Knight Frank and author of the firm's Asia Pacific Residential Review.

Last year, governments across the continent introduced various policies, including limits on bank lending and higher taxes on real-estate transactions, to limit speculation and rampant price increases.

But these policy measures, coupled with a global economic slowdown, are reining in prices in several markets in Asia, which until recently bucked global trends with a real-estate sector that was appreciating rapidly.

China's housing market has been one of the most deeply affected. Housing prices in Beijing and Shanghai (Knight Frank only tracks the prices of those cities in China) rose only 0.3% in the first quarter when compared with the last quarter of 2011. On an annual basis, house prices in China are down 2.2%.

Just a year ago, Chinese housing prices were increasing 8% on annual basis.

But other countries are also seeing their governments successfully rein in markets. In Singapore, housing prices slipped 0.2% on a quarterly basis. Malaysian housing prices fell 0.6%, while Taiwan's market dropped 1.5%.

Hong Kong prices rose 1.4% in the first quarter, but Mr. Holt said that the city still has low supplies of housing inventory, which keeps prices elevated.

The Indian market is slowing too, with prices down 0.9%, though Mr. Holt said that was due more to economic problems than government policy.

The most promising market in Asia is Indonesia, Mr. Holt said, calling it "the flavor of the month" among investors. There, prices rose 0.8% on a quarterly basis, which translate to a modest 3.6% annual gain. "The fundamentals are stacking up nicely," he added.

Knight Frank also released the latest update on its Global House Price Index, which tracks residential prices across the world. The index showed that prices remained flat during the first three months and only eked out a 0.9% gain when compared with a year ago, the lowest price rise since late 2009.

The firm said that economic weakness in Europe coupled with Asian governments' efforts to cool the market have kept a lid on global prices.