APAC prime residential prices maintain rise amidst pandemic

Auckland leads index in Q4 2020, with prime growth of 18%.

Fourteen out of 23 prime markets in the Asia-Pacific region recorded price growth in 2020, reveals Knight Frank’s The Wealth Report.

The Prime International Residential Index tracks the movement of luxury residential prices in 100 cities and second home markets globally.

Four cities in Asia Pacific were included in the top five, led by Auckland with a 17.5% annual percent change. Next are Shenzhen with 13.3%, Seoul with 11.7%, and Manila with 10.2%.

The report also reveals that prime residential prices performed better in 2020 than in previous years. It recorded an average price rise of 1.9%, an increase from the 1.8% in 2019.

According to Victoria Garett, Knight Frank’s head of residential for Asia Pacific, the main drivers that aided prime residential markets were low borrowing costs and improved vaccine optimism.

“The low borrowing costs and the improved vaccine optimism seen towards the end of 2020 were the main drivers that aided some of the prime residential markets in Asia-Pacific through the pandemic storm,” she said.

Due to New Zealand’s handling of the COVID-19 crisis, Auckland took the lead in the index with average prices ending 18% higher by end of the year. This is backed up by the country’s rapid economy recovery, ultra-low mortgage rates, and limited supply of quality stock.

“Grounded by travel bans, the desire to live in green open space that enables a better work-life balance has never been greater…Expats have been returning home and luxury buyers are also looking to upgrade their main residence or invest in a secondary residence as a result of he bullish stock market,” Garett said.

In Mainland China, property sales volumes returned to average daily levels in 30 major Chinese cities.

Leonard Tay, Knight Frank Singapore’s head of research, said that prices of prime homes in Singapore remained unchanged. The continuing travel restrictions prevented potential foreign investors from purchasing homes.

“The prolonged and continuing travel measures restricting the inflow of visitors into the city-state prevented foreign investors interested in purchasing homes in Singapore from physically viewing these units, resulting in an overall 20.4% [YoY] decline in sales of luxury homes compared to 2019,” he said.

However, it is projected that demand for luxury homes will grow in Singapore this 2021.

“The demand for luxury homes in the city-state is projected to grow in 2021 as investible properties remain at comparatively affordable price points, and this is expected to strengthen foreign buyers’ confidence in the market, which could translate into greater sales of prime non-landed residential units once the COVID-19 vaccine distribution proves to be successful and travel restrictions ease,” Tay explained.

In its study on homebuying attitudes, the survey shows that one in five ultra-high-net-worth individuals in the Asia Pacific is planning to buy a home in 2021. Among countries in Asia, Singapore emerges as the top most desirable location, whilst it ranks fourth globally.