Why Asia missed the global house price boom: an in-depth analysis

By
Services for Real Estate Pros with Global Property Guide
Globally, we are witnessing the biggest and most extensive house price boom in recorded history, both in terms of the number of countries experiencing real house price gains, and the number of successive years that house prices have been rising.

However, while property in much of the developed world is at historic peaks, property prices in most Asian countries are well below peak levels. Here, the Global Property Guide explores why.

Essentially property prices in Asia have lagged for three reasons:
  1. The Asian Crisis caused a long period of high interest rates, and an economic slowdown, which slowed the growth of the mortgage and real estate markets.
  2. Post-crisis loan portfolios were full of defaulted property loans. It took a long time before banks regained the capacity to lend at pre-crisis rates.
  3. Poor credit information, weak legal systems, lack of transparency, high revenue extraction by governments in the form transfer taxes and of registration fees, all raise the costs of housing, and discourage lending and housing investment in some countries.

The Asian crisis caused an interruption in banks making mortgage loans available to borrowers at anything near acceptable interest rates – and a reduction in the willingness of the banks to lend. When this period came to an end, at different times in different countries, the fizz returned to Asian housing markets.

Demand is now growing strongly, and developers are racing to meet supply, though rising global interest rates have recently somewhat dampened the euphoria.

 

 

 

Comments (3)

Anonymous
property hanoi

It came to that time when asian countries had lagged on the real estate industry. But as of now Asian countries grow in the industry and one of those that are booming now is property hanoi

May 17, 2010 10:14 PM
#1
Anonymous
property hanoi

It came to that time when asian countries had lagged on the real estate industry. But as of now Asian countries grow in the industry and one of those that are booming now is property hanoi

May 17, 2010 10:16 PM
#2
Fred Griffin Florida Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

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Jul 16, 2016 11:07 AM