2024 Global Real Estate Market Outlook: How hot or cold will the real estate markets in the United States, Japan, and Southeast Asia be?

As central banks around the world raise interest rates to curb inflation, house prices in many economies have cooled compared with earlier in the rate hike cycle.

According to research by the International Fund and Monetary Organization (IMF), mortgage rates in advanced economies climbed by more than 2 percentage points in the first half of 2023 compared with the previous year. Actual house prices fell by more than 10%. In contrast, Asian economies such as Japan, Thailand and Malaysia have performed well.

How will the real estate market in developed and emerging economies change in 2024?

U.S. 30-year home loan interest rates

The United States: Returning to normalcy from the polarities of ice and fire

According to data from the U.S. Federal Home Loan Mortgage Corporation Freddie Mac, after entering 2023, affected by the Federal Reserve's interest rate hikes, the U.S. 30-year mortgage interest rate continued to rise, reaching a peak of 7.79% at the end of October.

Against this background, the originally hot "spring home buying season" became silent, with housing inventory remaining at historically low levels throughout the year and sales falling sharply. Amid a combination of low supply and low demand, U.S. home prices remain strong, with the median U.S. home price peaking at $425,000 in June last year, according to the National Association of Realtors (NAR).

But mortgage rates began to slide last November. As of the week of January 11, the U.S. 30-year mortgage rate was 6.66%. According to the latest National House Price Index from S&P CoreLogic Case-Shiller, U.S. house prices rose 5.2% year-on-year in November 2023. Will reduced mortgage burdens revive activity in the U.S. housing market?

Kashif Ansari, co-founder and CEO of Juwai IQI Group, a global real estate technology company headquartered in Kuala Lumpur, told China Business News: “The reduction in mortgage interest rates has attracted more buyers. But it is not low enough for homeowners to be excited enough to list their houses. There are more buyers, but the number of houses has not increased, so housing prices have risen again. Most homeowners in the United States currently have mortgage interest rates below 3%. Generally speaking, Interest rates would have to fall to 4% to 5% before they would be considered normal, and now the market judges that interest rates may not be lowered to this level until 2025."

Yang Xiaowen, co-founder of Boston real estate technology company GeoHomeUS, also believes that the impact of the reduction in mortgage interest rates has begun to appear. However, since 90% of homeowners' loan interest rates in the U.S. housing market are below 6%, homeowners are still not motivated to sell their homes. Even if the U.S. economy slows down in 2024, there will not be much room for the U.S. housing market to decline.

"Industry practitioners feel that the number of houses that need to be sold at reduced prices has decreased. Data shows that the number of loan applications in early January 2024 increased by 10% compared with the last week of December last year, indicating that home buyers have begun to prepare to enter the market." Yang Xiaowen said For example, the Boston area where he is located said, "This winter, there are basically no residential properties with positive cash flow on the Boston market. Many senior investors in the real estate market who buy every year have complained that in the winter that just passed, they gritted their teeth and paid high prices. They were all simply rejected by the seller. The cash was still in the account and no suitable investment targets could be found.”

Ansari predicts that the U.S. real estate market will be booming in 2022, in stark contrast to the "coldness" in 2023, and 2024 may be a relatively "normal" year for the real estate market. In other words, transaction volume will rise, more homeowners will list their homes, more buyers will take action, and property prices will fall in some areas.

"Some institutions predict that the growth in housing prices in the United States will be lower than that in 2023. For buyers who are struggling with affordability, 2024 is a promising year." Ansari said, "For Asian buyers, the epidemic has affected the United States for three years The boom in the real estate market has caused them to shift their attention from Southeast Asia to the United States again. We have seen that people who bought houses in the United States before the epidemic have now found that the value of their American properties has increased a lot."

Japan: Investment opportunities under a weak yen

Over the past year, as the Bank of Japan maintained an ultra-loose monetary policy and the yen weakened, the Japanese real estate industry has been favored by investors.

Koji Nato, director of Japanese capital market research at real estate services company Jones Lang LaSalle (JLL), said that in the first quarter of 2023, the amount of investment by foreign investors in the Japanese real estate market doubled compared with a year ago. , reaching US$2 billion. "Japan's real estate transaction activity has been the strongest globally this year, and interest rate policy is widely believed to have kept Japanese real estate resilient," the company mentioned in a report.

Ansari also believes that Japan is one of the few bright spots in the global property market in 2023. He explained: "In the third quarter of last year, Japanese property prices increased by 11% year-on-year. Japan is the only developed economy that maintains low interest rates. The depreciation of the yen last year increased the purchasing power of foreign buyers, and there are no restrictions on foreigners buying houses in Japan. , these factors made Japan one of the main target countries for international real estate investment last year."

In October last year, the Bank of Japan said in a quarterly report on the financial system that real estate-related loans continued to grow, mainly to meet the needs of foreign investors. The Bank of Japan said that in the heat map of economic hotspot industries, the real estate market has shown signs of overheating.

According to a report by the Japan Real Estate Economics Institute (REEI), due to increased demand, the average price of new apartments in central Tokyo increased to a record high of 129.6 million yen (approximately US$863,000) in the first half of last year. London-based real estate consultancy Knight Frank said in its 2023 annual wealth report that a buyer with $1 million could buy 60 square meters of prime property in Tokyo, almost twice the size of New York or Singapore.

Glass Wu, founder and CEO of Japan Hana Real Estate, which specializes in serving foreigners investing in Japanese real estate, also told China Business News that the average price of new apartments in Tokyo exceeded the historical peak price last year. . “In the center of Tokyo, several top-level luxury homes have appeared in recent years. Some of them are priced as high as 50 to 60 million yuan per unit, which is comparable to the towers next to Manhattan’s Central Park. The buyers include Japanese and foreigners. There are also Chinese buyers,” she said.

"Japan will host the World Expo in 2025. This is something that foreign investors have recently mentioned when looking for housing." Hu Kaiqi revealed, "We have recently served several Chinese listed companies. They are optimistic about investment opportunities in Japan's tourism industry. We are helping They are looking for hotels with around 100 rooms, and there are not many of these assets left on the market.”

Ansari also said that Japan has long been among the top 10 in Juwai’s IQI inquiry rankings. "In 2024, Japan's commercial properties such as logistics centers and hotels, as well as residential properties in the center of Tokyo and Osaka, will increasingly attract foreign institutional investors and individual buyers," he said.

Southeast Asia: The government introduces measures to control

In a recent report, the Asian Development Bank (ADB) predicted that Southeast Asia's gross domestic product (GDP) will grow by 4.7% in 2024, up from 4.3% in 2023. The IMF also predicts that the economic growth rate of the ASEAN region will be 4.6%. Ansari believes a strong economy and an influx of foreign direct investment will support the region's property market.

But the governments in the region are also introducing policies to regulate the property market.

According to data released by the Urban Redevelopment Authority (URA) of Singapore, in the fourth quarter of 2023, Singapore's private residential property index increased by 6.73% compared with the same period in 2022, after the third quarter, second quarter and first quarter of 2023. The year-on-year increases were 4.37%, 7.46% and 11.44% respectively. From 2016 to 2022, Singapore's residential real estate prices have increased by a cumulative 37.5% (22.2% after adjusting for inflation).

The overheated real estate market has forced the Singaporean government to introduce a series of property market control policies, which has led to a continued decline in demand for real estate in Singapore. URA data shows that in the first three quarters of 2023, total housing sales, including new sales and resales, fell sharply by 19.6% year-on-year, and fell sharply by 34.8% in the whole of 2022.

Morgan Stanley said in a report in November that Singapore's historic seven-year rise in private home prices is nearing an end, with prices likely to fall by 3% in 2024, and that this downturn is likely to Lasted for two years.

In contrast, Ansari said: "Recently, the Thai government has frequently taken various measures to attract foreign tourists and long-term residents. Coupled with the fact that property prices in Singapore have become increasingly unattainable, many ordinary buyers will return to Thailand."

Zhang Dandan, director of real estate channels (head of China) of Singapore's Banyan Group, also told China Business News that the latest news of permanent visa exemption between China and Thailand may boost the Thai market. "In addition to its warm climate and tourism, Thailand's comparative advantages in senior care, medical care and education determine that its properties will continue to be attractive to foreign, especially Asian buyers," she said.

In addition, Ansari said that Malaysia will once again optimize its second home long-term residence program this year, which will be very attractive to foreign buyers. Malaysia is also the only Southeast Asian country where foreigners can own land.