Property markets have seen some exciting changes in recent years, and also some trying times. During Covid, the US and UK property markets saw huge price hikes as demand outstripped supply. Record-low interest rates also helped the market.
However, since then, inflation has soared. Buyers have been unnerved by high mortgage rates and house prices.
Asian housing markets also saw changes throughout the region during this time, and some interesting developments are emerging.
How are the US and Asian property markets in 2023?
There are many serious real estate property buyers interested in investing in homes right now. But, how is the market actually looking?
The median price of existing homes dropped by 0.2% in February according to the NAR. This drop ended a streak of 131 consecutive monthly increases year-over-year.
The slight price drop led to home sales increasing by 14.5%. The increase ended a run of 12 consecutive months of declining house sales.
In Asia, the market is more varied. In Malaysia, new-build prices are expected to rise due to the cost of materials. The Japanese real estate market is expected to remain stable. However, there is concern in Japan that rising interest rates in the latter half of 2023 may cause investors to back off.
However, there is genuine positivity in the Asian real estate market generally. One report in Asian Investor predicts Asia will go from having the smallest share of the global property investment market (30% in 2023) to the largest by 2032.
Will property sales see a slump or surge?
Prices are starting to show signs of decreasing which will help to stir interest in buyers, but sales may remain slow. Mortgage rates will play a huge part in how US sales go in 2023.
One senior economist for Real Estate Research proposes mortgage rates could reach 8.5% if inflation continues to rise.
American housing market
Total home sales are predicted to be 4.67 million units. If this prediction is met, it will mean the slowest yearly sales pace since 2011.
However, new builds are increasing. Perhaps you’ve dreamed of building your own home, well now might be the time. Housing starts increased by 9.8% from January to February.
Asian housing market
There are 48 countries in Asia. Giving an accurate outlook on the housing market in a brief article such as this is impossible. But, the GPG can give a broad picture.
The Global Property Guide looks at 18 housing markets across countries such as China, India, Japan, Singapore, and Thailand. Out of 18 countries, only 4 had seen house prices decline.
Housing prices in Singapore rose 8.64% from the previous year. And India saw a rise of 2.04% on average.
What happened to the Asian property market in Covid?
The US housing price surge during the pandemic is well-known. But, Asia saw significant changes to its real estate market also.
India saw a 2-year slump in the real estate market with huge amounts of unsold inventory at the end of 2022. However, some areas of India saw prices surge during periods of the pandemic. Ahmedabad saw house prices rise by 16.5% as Covid struck, and again by 28.9% as the second wave occurred. Delhi saw a decline in house prices by 4.2% on average though.
In China, the pandemic has had an impact on real estate development in 2023. China’s National Bureau of Statistics reports that real estate development investment decreased in February showing a 16.4% year-on-year drop.
Is real estate still worth investing in?
Many financial experts are predicting further Fed increases which would point toward higher mortgage rates. Yet, real estate remains a good investment if certain trends are followed.
Hedging against inflation
Real estate investment offers a way of saving money. And real estate investment can be a hedge against inflation. If a cash purchase is made, or the best interest rates are locked in, then purchasing property can be a good investment in a high-inflation environment.
New builds can be a good real estate investment also. New construction that meets a demand will make a sound investment. Studying which areas of the housing market are in demand will make it clear what construction projects will generate a good ROI.
Fixing and flipping
Buying a distressed property to fix up and sell has been popular for years. Purchasing and rebuilding a home to make a profit is still a viable way to invest in real estate in 2023.
The Asian real estate market may emerge as the prime location for property investment if predictions are accurate. And housing prices continue to rise in Asian markets. However, rising interest rates could hamper some markets in the second half of 2023.
In the US, house prices may start to drop. And sales have already increased this year. It seems likely the rest of the year will remain slow, but interest rate hikes will have a big say in how 2023 pans out.