The 2008 Asian Housing Review: A Continent Evolving

The residential property market in Asia was defined by a growing demand for good quality housing over the last six decades, according to a report put out by …

The residential property market in Asia was defined by a growing demand for good quality housing over the last six decades, according to a report put out by the Royal Institution of Chartered Surveyors (RICS), the largest organization for professionals in property, land and construction. The 2008 Asian Housing Review, covering the urban areas of six countries in the region—China, Hong Kong, Japan, Malaysia, Singapore, South Korea and Thailand—found that economic growth was the main factor that led to a dramatic rise in home ownership. The expansion of the mortgage sector and the increase of buyers utilizing it has contributed significantly to this trend. More than half of all households in the surveyed countries own their residence.

There are three factors that have shaped residential demand in Asia, according to the report. The first one is high population growth in the main cities across the region. A search for a better life continues to bring many rural residents to urban areas. The second is the declining household sizes that have resulted from society-wide changes such as young people moving out of their parents’ homes before getting married. The third is a higher living standard, which in turn has led to a demand for better quality homes.


Beijing and Shanghai, the two biggest cities in China, are seeing a strong demand for residential property at all levels, according to the report. The housing market in these cities is driven by a large internal migration of people from rural, often poorer areas, to the cities in search of employment and a better life. Despite the privatization of housing in the 80s, the Chinese government continues to interfere in the real estate market by putting in policy controls that sometimes adversely affect the real estate market. (For more on potential problems facing the real estate market in China, please see previous articles, China Real Estate Market Faces Slump and Investment in Chinese Real Estate: A Limited Fortune.)

Residential high rises in Kowloon, Hong Kong| alt=|High rises in Kowloon Hong Kong|]Hong Kong

Demand in Hong Kong’s residential sector remains unabated at all levels, according to the study. Housing prices are affected by a dearth in the development of new residential properties. Compared to other countries in this report, home ownership in Hong Kong—which accounts for only about half of all households—is low. After prices went down right at the turn of this century, they recovered in 2004 and then rose again in 2007.

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Post-war Japan was characterized by aggressive housing construction policy that was set in place to stimulate economic growth. This led to the oversupply phenomenon of the 1970s, where the number of residential properties available was greater than the number of households.

In the 1990s, a slowdown in the Japanese economy adversely affected homeowners, tethering them to houses that were losing value fast. However, since 2002, the Japanese economy has been growing at a healthy pace. The current economic slowdown, which has its roots in the United States, is sure to affect the Japanese economy negatively. This, in turn, may reflect on the housing sector. Home prices in Japan have more or less stayed the same for the last five years.


An astonishing 85 percent of Malaysian households own their homes. Healthy economic growth that began in the 1980s has resulted in strong residential property demand. This has fueled all levels of housing construction. However, the upper end of the market suffers from an oversupply that resulted from the construction of too many developments targeting high income households. The low end of the market, on the other hand, has the opposite problem: shortage of low income residential developments. Data for the last decade show that home prices in Malaysia have been growing steadily since 1999.


The three factors that affect housing demand in Singapore are a well-heeled domestic market, declining household size and robust immigration. Demand in the upper crest of the market is driven by foreign residents who come to Singapore for work. Singapore has the highest rate of owner-occupied households, at about 90 percent. Savills Valuation and Professional Services Limited, the company that produced The Asian Housing Review 2008 report for RICS, downgraded its growth forecast for the city-state’s residential sector from double digit levels to below 5 percent. After home prices fell in 2000, they remained more or less the same until 2007, when prices saw a significant up-tick.

South Korea

More than half of all households are homeowners in South Korea. The country’s government plays a strong role in the housing market to protect prices from inflation. Investor activity has slowed down because of the global economic downturn and anxiety over the possibility of declining housing prices. Data for the last decade shows that housing prices in South Korea have been on an upward trend.


Since the 1980s, the housing sector in Thailand has been growing at a healthy pace. The Government Housing Bank has played a huge role in bringing the owner occupier level to a high 83 percent of all households. However, investor confidence in the country’s real estate sector is adversely affected by the continued political instability.

Overall, the region has been successful in raising the living standards of its people and improving access to home ownership as a form of poverty reduction, according to Darren Jensen, Director of RICS Asia. “Now, however, the housing markets across Asia face fresh challenges, with the advent of the global credit crunch. The development and maturity of the housing and financial markets across Asia means that we are far better placed to weather this storm than would have been the case a few years ago, and I am sure that in the longer term, the housing market will continue to be able to meet the needs of all groups within society, contributing to the stable and harmonious development of society across Asia,” he wrote in the 2008 Asian Housing Review.


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