Home prices growth tipped to remain at 2% in 2020-2021

Most Asia Pacific countries saw a continued use of macroprudential measures in 2019.

Home prices growth is projected to remain about 2% in both 2020 and 2021 to reflect a recovery in GDP growth of 1.5% over the same period after slowing to 0.6% in H1 2019, according to a report by Fitch Ratings.

An improvement in borrower affordability as household incomes grow faster than home prices, as well as lower interest rates are also expected to boost home prices.

Home prices declined by 0.7% from Q3 2018 to Q1 2019, attributed to regulatory tightening and mortgage rate increases that dampened market sentiment. Home prices rebounded slightly in Q2 2019. Fitch Ratings projects minor growth for the rest of 2019.

“If the government views home prices as rising more than is justified by economic fundamentals, we expect the government would again cool the market through macro-prudential measures,” Fitch Ratings analyst Hitoshi Hibino said.

All countries in the Asia Pacific except Japan were noted to have experienced a continued use of macroprudential measures in 2019 to control demand, stabilise home prices and avert systemic risk associated with high housing debt.