Tags: Asia | real estate bubble | China | deflation | housing bubble

Asian Real Estate Bubble Begins to Burst

By    |   Friday, 16 Dec 2011 02:38 PM

As Asian property prices surged 70 percent or more over the past two years, skeptics have warned that a bubble was brewing.

 

Now it looks like that bubble is bursting. Real estate prices are falling in Beijing, Hong Kong, and Singapore, The Wall Street Journal reports.

 

Most analysts expect the decline to remain moderate, with prices buoyed by Asia’s strong economic growth. They may well be right, but recall that most analysts foresaw nothing more than a mild correction in the United States when real estate prices crested in 2007.

 

A deceleration of Asia’s economic expansion and steps taken by governments in the region to cool their red-hot real estate markets are weighing on property prices.

 

Singapore is one market where analysts do fear a market plunge. Supply trends certainly aren’t bullish. More than 100,000 new residential units will likely come on the Singapore market in the next three years, according to Standard Chartered analysts.

 

"From late 2012 we believe rising levels of unsold inventory . . . will continue to depress rents and capital markets," David Lum, an analyst for Daiwa Capital Markets, writes in a report obtained by The Journal.

 

In China, ironically enough, the deflation of the housing bubble is sparking another bubble — in commercial real estate, Shaun Rein, managing director of the China Market Research Group writes on CNBC.com.

 

“Blocked by government restrictions on the residential side, developers are rushing into ill-conceived commercial projects,” he says.

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As Asian property prices surged 70 percent or more over the past two years, skeptics have warned that a bubble was brewing. Now it looks like that bubble is bursting. Real estate prices are falling in Beijing, Hong Kong, and Singapore, The Wall Street Journal reports. Most...
Asia,real estate bubble,China,deflation,housing bubble
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Friday, 16 Dec 2011 02:38 PM
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