Asian Economy Affected by Real Estate Stall

The forced dispute between China and the US has affected the majority of the Asian region. While China appears to have countermeasures in place, the rest of Asia--according to Nikkei Asian Review--does not have one in place. This has led to homebuyers and other investors scrambling for ways to cope with the situation.

In some Asian territories, residential properties have been sold more towards investors rather than home-buyers who are looking for homes to live in. The solution that developers found was to have lotteries, where both investors and home-buyers have equal chances at these properties. However, with the low number of properties and the huge number of investor-entrants, home-buyers have felt that they were still at a disadvantage.

Some territories in Asia have started to sell homes at a loss. Prices have started to climb up last July 2018, and in response, the decline of the economy in these parts quickened. Only November last year, the prices have started to fall by 3.5%, an alarming rate ever since the global financial crisis happened in 2008.

The effect of the US-China trade dispute has even begun to affect South Korea and Japan after investors have started to gain more insight into what the dispute is doing to China's exports. The US may be getting what they want, according to CNBC. Louis Kuijs, the head of Asia economics at Oxford, pinpointed the situation between China and the US as a catalyst in the speeding decline of Asian economies.

South Korea's economy, meanwhile, felt the decline through the waning demand for some of its biggest imports. The Korean smartphone giant Samsung failed to make a dent, only making 1.11 percent of its imports. SK Hynix and Naver, meanwhile, struggled to fill in 4.61 and 3.05 percent of its shares, respectively.

China's situation isn't the only thing that investors in the region are worried about. The US is a major trading partner for these countries too. With the government shutdown still in place, there are worries that it could also add on to the already troubled state economies in the region are in, largely because of the trade problems the shutdown could cause.

As the economy slows down, there are some ways governments are trying to combat it. Lowering the market temperature is one; Singapore did it by putting a 5 percent increase on 'buyer's stamp duty rate' on property purchases, timed with an increase in price indexes last June to this year. If left unchecked, however, it could become a problem in the long run.

© 2019 Business Times All rights reserved. Do not reproduce without permission.
Loading...
Sign Up for Newsletters and Alerts