Almost all countries discussed in this blog post, with the exception of Thailand, have been experiencing rapid growth in home prices that have outstripped inflation by a wide margin. The gap between home prices and their inflation adjusted levels are at the widest ever, particularly in Singapore and the Philippines.
Singapore's home prices slid for four straight quarters, which, according to Bloomberg, is the longest losing streak in five years. Home prices are still 81% above their year end 2004 levels. Overall prices levels, as measured by inflation have just increased by 30.37% since year end 2004. In other words, for the past ten years, Singaporean home prices have outpaced inflation by more than 50 percentage points.
Neighboring Malaysia's House Price Index actually topped out at 135.44% in the second quarter of 2011 and has posted a 3.37% decline since then to 130.87% as of the fourth quarter of 2013. In the first quarter of 2014, home prices rebounded to 133.03% and have continued to march higher to 134.22% as of the third quarter 2014, reducing the overall decline from the peak to just 1.02%. Home prices are just 34.22% above their year end 2004 levels. General price levels are only around six percentage points lower, at 28.26% above their year end 2004 levels.
In Thailand, which has been experiencing political turmoil for some time, home prices have remained essentially flat since the end of 2004. Home Prices ended 2013 with the index at 100.54%, just 054% higher than the end of 2004, but showing a substantial recovery since the recent low of 74.08% posted in the third quarter of 2009. In the third quarter of 2014, home prices have rebounded to 106.23%, or 6.23% higher than its year-end 2004 levels, way below its expected inflation adjusted levels. General Price levels are 34.68% above their year end 2004 levels.
Meanwhile in Indonesia, home prices have showed no signs of slowing down their upward trajectory. In fact, prices seem to have gone parabolic, climbing 4.63% in the last quarter of 2013, from a base of 121.49% as of the third quarter of 2013 to 127.11% as of year end 2013. In the third quarter of 2014, home prices have climbed an additional 6.64% to reach 133.75%. Since the first quarter of 2007, home prices have risen 33.75%. Indonesian Home Prices, like Thailand, have lagged inflation since 2007.
Philippine house price index stands at 208.08% at the end of the third quarter 2014 or over 108.08% above their year-end 2004 levels. Philippine home prices have posted the largest 10 year gains among all the countries considered in this blog post. Like Singapore, Philippine home prices have outstripped inflation by more than fifty percentage points. Like Indonesia, Philippine home prices have so far no signs of slowing down their upward trajectory for the foreseeable future. The question is, is this momentum sustainable? Or will the Philippines and Indonesia follow its ASEAN neighbors, Singapore, Malaysia, and Thailand, in exhibiting plateauing or declining house prices? That remains to be seen.
Source: Global Property Guide, World Bank, Trading Economics