House prices continue to grow despite cooling measures

Malaysia’s house price index grew by 5.3% in the fourth quarter last year (4Q2016) from the corresponding period of 2015, according to Knight Frank’s “Global House Price Index Q4 2016” report.

The index monitors and compares the performance of mainstream residential markets in 55 countries across the world, 11 of which are from Asia-Pacific. Malaysia is ranked 27th among all the countries.

Knight Frank Malaysia Sdn Bhd executive director of research and consultancy Judy Ong Mei Chen said the house price index in the country continues to grow but the pace of growth has slowed down owing to the slew of cooling measures introduced by the government to curb speculation in the property sector.

“Malaysia still remains an attractive investment destination in the region with its stable property market and relative lower entry prices that continue to offer reasonable returns,” she added.

Globally, the index grew by 6% in 4Q2016, up from 5.3% in 3Q2016 and 4.1% in 4Q2015. It is the highest annual rate recorded since 1Q2014.

Among the 55 countries, Iceland leads the ranking for the first time since the index began in 2006 with a year-on-year increase of 14.7% in 4Q2016.

Meanwhile, New Zealand and Malta ranked No 2 and No 3 in the list with a house price annual growth of 12.7% and 12.4% respectively.

Knight Frank Asia-Pacific head of research for Asia-Pacific Nicholas Holt said New Zealand, the strongest performing market in the region, is seeing price growth moderate after a number of quarters of upward momentum.

However, with the market still suffering from supply shortages, he believed overall growth will remain positive throughout the year.

“In Asia, the most notable market was Singapore where the surprise slight easing of certain cooling measures is likely to spur some additional interest in the market. Sitting close to the bottom of the chart, many buyers in Singapore are still constrained by the Additional Buyer’s Stamp Duty and lending restrictions,” he said.

The house price in Singapore has fallen by 2.6% in 4Q2016 from a year ago.

Knight Frank International Residential Research partner Kate Everett-Allen noted that the growth rate in the US increased from the last quarter, whilst the UK drifted lower.

“The overall picture is one of stable or rising prices, despite the global landscape of political and economic uncertainty. The number of housing markets recording price rises has increased from 43 in 2015 to 47 in 2016. With higher inflation and diverging monetary policies expected in 2017, we may see a widening gap between the strongest and weakest performing market.” - The Edge Property