Asean homebuying sentiment rises in first quarter of 2017

May 17, 2017

by: FT Confidential Research

After weakening in 2016, sentiment among homebuyers in Asean improved in the first quarter, with positive readings in each of the five countries we survey. However, sentiment in three countries remained in negative territory (below 50 points).

Expectations for higher interest rates and slower income growth suggest this mild improvement will not translate into a sustained region-wide market recovery this year. Our Property Price Expectations Index suggests many consumers will continue to struggle to afford a home. The index rose by 0.6 points in the first quarter to 81.2.

• The Property Buying Sentiment Index for Indonesia rose to 45.9 points in the first quarter, from 43.8 in the fourth quarter of 2016. Weak income growth is dragging on property demand and a recent tax amnesty programme, which ended March 31, is unlikely to have any discernible impact in terms of spurring purchases until next year.
• Malaysia’s property buying index rose from 29.3 to 33.5 — the greatest quarter-on-quarter improvement of the Asean-5, although it remained in negative territory. Affordable housing demand has been boosted by the expansion of the state-led 1Malaysia People’s Housing Programme, although the luxury segment remains weak.
• The Philippine index improved quarter-on-quarter from 61.5 to 65.5. Slowing price growth is supporting demand for new condominiums. A central bank index of residential property gained just 0.3 points year-on-year in the fourth quarter of 2016, taking price growth to its slowest rate since the series began in the second quarter of 2015.
• A weak economic outlook continues to damp property demand in Thailand, where our index rose 4 points quarter-on-quarter to 30.3 but remained at the lowest level in the region. The Thai economy grew 1.3 per cent in the first quarter from the fourth, the fastest in four years. While construction of residential buildings rose 2.2 per cent during the period, private firms continue to expect subdued demand, as investment went down 1.1 per cent after falling 0.4 per cent in the final quarter of 2016. High household debt is also preventing many middle-class homebuyers from accessing mortgages.
• The Vietnam index inched up 0.6 points from 52.7 to 53.3. Expectations of more affordable housing coming on stream are fuelling positive sentiment among the middle class. Other developers are seen following a plan by Vingroup to build up to 300,000 affordable apartments this year on the outskirts of Hanoi and Ho Chi Minh City, attracting middle-class buyers.