bidding wars, cash offers drive up home prices
Singapore has hinted that unvaccinated travelers may be subject to longer quarantine periods and additional testing.
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SINGAPORE — Housing prices have shot up across cities in Asia-Pacific this year, fueled by record low interest rates amid the pandemic.
Optimism has also gained steam as vaccination rates gain pace, and some countries move toward a post-Covid recovery.
As companies move to a hybrid work model — a mix of working from home sometimes, and in the office at other times — demand for larger homes has also picked up, analysts say.
The overheating in property markets across some Asian cities has led to wide expectations that governments will intervene through housing curbs or other measures such as fiscal or monetary policy.
South Korea, for instance, hiked interest rates for the first time in three years in August – analysts attributed the move to rising home prices and increasing debt.
Rising property prices
Here are the cities with the highest year-on-year price increases as of end June, according to data from real estate consultancy Knight Frank.
On average, the annual growth across Asia-Pacific was at 6.4% year-on-year — the highest increase in four years, according to Victoria Garrett, head of residential Asia-Pacific at Knight Frank.
It’s a property market on steroids.
Kenneth Tan
real estate agent, PropertyLimBrothers
Analysts and real estate agents say there’s been intense competition among home buyers, leading to bidding wars and sky-high cash offers way beyond market valuations.
Sean Coghlan, global director of capital markets research and strategy at JLL, said: “There are more prospective buyers than on-market opportunities, creating more intense bidding processes,” Coghlan says, adding that has been seen in the residential and logistics property segments in the region in particular.
“Greater competition and the deep pools of capital targeting real estate are combining to drive up pricing,” he said.
Housing market ‘on steroids’
One property agent in Singapore described the housing market in Asia as being “on steroids.”
“Some buyers don’t even view the homes, they put in the offers after seeing them from the outside, or just view the home tour videos,” said Kenneth Tan of PropertyLimBrothers, a real estate agency. He added that for every 10 buyers, three would dispense with the viewing.
Bidding has been so frenzied, their listings have attracted cash offers that can be up to 800,000 Singapore dollars (about $595,000) more than the official price valuation for properties priced at over 3 million Singapore dollars ($2.2 million), according to Tan.
For those with valuations over 1 million Singapore dollars, his agency has received additional cash offers of up to 80,000 Singapore dollars.
All-cash offers are also on the rise – typically for properties between 4 million Singapore dollars to 8 million Singapore dollars, according to Tan.
“It’s a property market on steroids,” he told CNBC.