Mumbai, Bengaluru among top 5 APAC cities with the steepest home price rise

Mumbai and Bengaluru were among the top five cities in the Asia-Pacific region that saw the steepest rise in home prices in the second half of 2022, a report released on Friday said. Both registered a price growth of 7 per cent year-on-year (YoY) between July and December last year. Metro Manila saw the steepest price rise of 24 per cent.

According to property consultancy Knight Frank’s Asia-Pacific Residential Review, Mumbai and Bengaluru shared the 4th position on the list. Singapore and Tokyo were in second and third place with a price rise of 9.3 per cent and 9 per cent, respectively.

Delhi was also on the list of top ten such cities with an average price rise of 6.8 per cent YoY.

“Despite the Reserve Bank of India (RBI) raising policy rates by a cumulative 225 basis points in 2022, residential demand in the country has not only remained resilient but surged to a nine-year high in terms of annual sales in 2022. The second half of 2022 is second only to the first half in terms of being the half-yearly period with the highest sales in nine years,” said Shishir Baijal, chairman and managing director at Knight Frank India.

The RBI has recently hiked the repo rate further by 25 basis points. According to the report, the prices in these three cities are expected to rise “moderately” in the next 12 years.

Bengaluru’s residential prices are expected to grow in the range of 3-5 per cent. Mumbai and Delhi’s prices are expected to grow between 3-4 per cent and 2-3 per cent, respectively.

“Despite the further 25 bps hike by RBI in February 2023, India’s inherent economic strength and healthy affordability levels will be the prime factors that will support the residential market in the next 12 months,” Baijal added.

In the Asia-Pacific region, a slowdown in prices was majorly noticed in New Zealand’s Auckland and Wellington and Australian cities like Sydney and Melbourne. Home prices in Wellington fell the most, 21.6 per cent, during the period. Auckland followed it at 17.3 per cent and Hong Kong at 13.8 per cent. Prices in Sydney and Melbourne fell 10.4 per cent and 8.2 per cent, respectively.

“Annualised home values in the APAC region’s residential sector rose noticeably slower in 2022, decelerating to 0.4 per cent from 5.7 per cent six months ago, as more homebuyers are priced out by the rise in mortgage rates and an inflationary environment sparks caution. Still, the slowdown belies the underlying resilience across the region. In markets that have corrected the most, such as Australia and New Zealand, home equity has stayed positive while the lagging property cycle in emerging Southeast Asian markets is now on a strong recovery footing. Across the region, residential markets continue to be well supported by robust economic fundamentals and are well positioned to weather the ongoing uncertainty,” said Victoria Garrett, head of Residential at Knight Frank Asia-Pacific.