Urban Land Institute: Property prices and rentals in popular Apac cities on uptrend

• The report also highlighted that due to significant immigration inflows into major cities in the region, home prices and rent have risen materially.

KUALA LUMPUR (May 21): Property prices and rental rates in popular gateway cities of the Asia Pacific (Apac) region are on the uptrend due to significant immigration inflows into cities, according to US-based global non-profit research and education organisation Urban Land Institute (ULI).

In its recently issued 2024 Asia Pacific Home Attainability Index report, the three current key property trends are: renting has increased in cities, young people are not able to own their own homes, and developers are encountering financial difficulty.

The report also highlighted that due to significant immigration inflows into major cities in the region, home prices and rent have risen materially.

“Popular gateway cities for overseas immigration and studies, such as Singapore, Sydney and Tokyo, have recorded steep hikes in home prices due to a large influx of immigrants, while key Australian cities including Sydney and Melbourne saw increases in rental rates due to falling vacancy rates of 0.9% and 2.2%, respectively,” the report said.

The organisation also observed that some local governments promote for-rent developments to ease the accommodation issue of young people. “To alleviate housing shortage and improve home attainability, countries and investors are pivoting towards promoting for-rent projects to increase the supply of affordable homes.”

For example, in Singapore, where housing policy is centred on home ownership, the government has recently sold a plot of land with a requirement for large-scale, long-term rental units. This unusual move was made after the Urban Redevelopment Authority (URA) determined that there is sufficient demand for long-term rental housing, especially among young professionals, students, and families in transition, following consultations with the industry.

“In terms of home ownership, public housing in Singapore continues to be the most attainable, while homes in Shenzhen are the least attainable. The median price of Housing Development Board (HDB) units, representing 90% of the total housing stock in the city-state, is less than five times that of the median annual household income, while Shenzhen has the highest ratio of median home prices relative to median annual household income at 32 times, followed by Beijing at 28, and Metro Manila, Ho Chi Minh City, and Hong Kong at around 25,” the report said.  

Meanwhile, ULI also pointed out that homebuyers and renters are forced to take on financial risks, such as loss of deposits or not receiving their completed homes on time, as home builders and landlords get into financial distress which impacts project completions.

For example, in mainland China, sluggish sales and escalating costs in the past two years have caused many leading home developers to incur unprecedented losses and default on loans. Given that pre-sale of homes before construction is customary in mainland China, buyers of such homes still under construction are placed in a precarious position where they run the risk of not receiving their completed homes on time.

To conclude the report, ULI Asia Pacific chief executive officer Alan Beebe said in a press release: “The housing market has been significantly affected by heightened interest rates and rising costs. Home ownership represents the most valuable asset for most households, and the housing sector is a key part of the overall economy. Moving forward, we expect to see governments in the region introduce more countermeasures to rein in rising home prices.”

The index report is published by ULI Asia Pacific Centre for Housing, which was established in 2022 and is a think tank that provides a forum to explore the latest trends and to address housing issues in the region.

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