The Relentless Climb of the Hong Kong Real Estate Market

 In the third quarter of 2017, the Hong Kong House Price Index rose by 1.83% quarter-over-quarter. On a year-over-year basis, the index rose by an astounding 17.65%.

The gains have been broad-based., spread out through all classes. The gains in Class A residences (less than 40 sq. m. in size) have out-sprinted the gains all other classes. Gains in Class E residences (greater than 160 sq. m. in size) are 30% lower than those of Class A.

Is Job Growth Deccelerating?

Is US job growth deccelerating? According to the chart above, job growth peaked at 240 thousand jobs per month in 2015. Since then, jobs added monthly has dropped more than 25% to reach 178 thousand in 2017.

A similar dynamic took place in the Great Recession when job growth peaked at 201 thousand jobs per month in 2006. By 2007, that number had dropped by over 36% in 2007. By 2008, job growth was a negative 63 thousand jobs added per month. The year 2009 was the worst for job growth: the economy lost an average of 495 thousand jobs per month that year. Job growth only turned positive in 2011, when the average hit 132 thousand jobs added per month.

Is the decline in jobs growth signalling another recession in the making?

Are Philippine Real Estate Prices Starting a Downtrend?

 

According to the BSP's Residential Real Estate Price Index (RREPI), residential real estate prices for the entire Philippines (All Types) declined for two quarters in a row, from 111.8 as of the first quarter 2017 to 111.6 as of the third quarter 2017 - a decline of 2.02% in six  months. The decline was led by ex-NCR real estate prices, which declined by 3.14% from a high of 111.6 as of the first quarter 2017 to 108.1 in the third quarter of 2017. The decline in NCR prices was marginal, only 0.17% in six months.

 The prices for Single Detached Homes in the NCR declined by a substantial 4.58% year over year, from 80.4 as of the third quarter 2016 to 76.5 as of the third quarter 2017. Ex-NCR prices for Single Detached Homes gained 1.43% for the same time period. On an overall basis, prices for Single Detached Homes increased by 0.78% year over year.

 Duplex prices declined substantial 8.58% year-over-year, from 96.7 as of the third quarter 2016 to 88.4 as of the third quarter 2017. The decline was led by NCR Duplex prices, which declined by an astounding 13.58%, from 89.1 as of the third quarter 2016 to 77.0 a year later. Ex-NCR prices also declined during this period, but only by 5.65%.

Townhouse prices were one of the bright spots in the residential real estate sector, climbing 7.25% from the third quarter 2016 to the third quarter 2017. The gains were led by NCR Townhouses, which increased by 11.61% for the same period. Gains in Ex-NCR Townhouse prices were more muted, gaining 2.55%.

Condominiums were another bright spot in the residential real estate sector. Throughout the Philippines, prices gained 3.64% year-over-year. The gains were primarily due to Ex-NCR condominiums, which rose 13.12% year-over-year. NCR condominium prices gained only 2.42% in one year.

How reliable are these trends? BSP's Residential Real Estate Price Index (RREPI) is relatively new, having begun only in the second quarter of 2015. So, it's a little over two years old and the results have been volatile. The kinks in the statistics will, hopefully, over time, be worked out.

Read: The Unbearable Volatility of BSP's Residential Real Estate Price Index

At What Point Will People Not In Labor Force Break 100 Million?

At what point will people who are not in the labor force break the important psychological barrier of 100 million?

The short answer? By June 2019, just in time for the 2020 Presidential elections.

Singapore Breaks its Controlled Slide of House Prices While Philippine House Prices Hit New Highs in 2017 Q3

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, Hong Kong, and the Philippines.

Singapore

Singapore's home prices have now been declining for fourteen straight quarters, which, according to Bloomberg, is the longest losing streak in five years.  Home prices are still  67.32% above their year-end 2004 levels. Overall prices levels, as measured by inflation have just increased by 29.59% since year end 2004.  In other words, for the past ten years, Singaporean home prices have outpaced inflation by almost than 40 percentage points.

 Malaysia


Neighboring Malaysia's House Price Index now stands at 255.74 as of the fourth quarter 2016, 155.74% higher than year-end 1998 levels.  General price levels as of the fourth quarter 2016 are only around 49.03% higher than their year-end 1998 levels.

Indonesia

Meanwhile, in Indonesia, home prices have shown no signs of slowing down their upward trajectory.  In fact, prices are now at 149.75 as of the third quarter of 2017 or 49.75% above their first quarter 2007 levels. Inflation, however, has marched higher.  General prices are 81.32% above first quarter 2007 levels. House prices, therefore, have lagged inflation by 31.37%.

Philippines

Philippine house price index stands at 235.20% as of the third quarter 2017 or over 135.20% above their year-end 2004 levels.  Philippine home prices have posted one of the largest 10 year gains among all the countries considered in this blog post.  Philippine home prices have outstripped inflation by almost seventy percentage points.  General prices stood at 167.13% or 67.13% above their year-end 2004 levels. 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.