THE performance of housing markets across the Asia-Pacific (APAC) is likely to vary significantly in 2021 despite a strengthening of macroeconomic indicators.
In this regard, Fitch Ratings expects Australia to see some of the strongest price gains among the 16 markets that it tracks globally in 2021 although prices in Japan are expected to decline by 1%-2%.
“The 3%-5% growth in Australian house prices that we forecast in 2021 will be driven by record low mortgage rates, government incentives for housing and limited supply, despite other challenges from the pandemic,” the credit rating agency pointed out.
“China will also see price growth, but the pace of growth there will slow after an estimated 4% rise in 2020.”
The housing market’s performance in China and Australia will be supported by robust gross domestic product (GDP) growth which Fitch forecasts at 8.0% and 3.8% respectively next year.
Japan’s growth will also strengthen, to 3.5% next year, but in contrast to China and Australia, this will be insufficient to reverse the damage done by the estimated 5.3% decline in real GDP in 2020 amid the COVID-19 pandemic shock.
“We forecast late-stage mortgage arrears to rise in 2021 in both Japan and Australia even as economic growth accelerates and unemployment rates decline, partly reflecting the withdrawal of forbearance measures that helped to constrain the increase in arrears in 2020,” projected Fitch.
“This trend will be evident in most global markets, but we expect China to be a notable exception with a slight improvement in late-stage arrears.”
Nevertheless, the credit rating agency caveated that its assumptions around house prices and arrears trends in 2021 will remain sensitive to government policy approaches and developments associated with the pandemic, including the roll-out of vaccines. – Dec 10, 2020
