Varied home price trajectories and stable arrears anticipated across key APAC markets in 2024: Fitch Ratings
Dec 12, 2023
New Delhi [India], December 12 : Fitch Ratings' Global Housing and Mortgage Outlook sheds light on the diverse trends expected in home prices and mortgage arrears across crucial Asia-Pacific (APAC) markets in the coming years.
The analysis foresees distinctive trajectories for Australia, China, and Japan, highlighting nuanced economic factors influencing these regions.
In China, Fitch projects a 5 per cent-7 per cent decline in home prices in 2024, extending into 2025.
Lingering weakness in homebuyer confidence, exacerbated by the prolonged stress on property developers, shapes this downward trend. Despite recent policy interventions to stabilize the market, home prices continue to face headwinds.
Japan's home prices are expected to experience a 2 per cent decline in 2024. This contraction is attributed to the tightening of monetary policy after a prolonged period of loose conditions, impacting home affordability and mortgage serviceability.
Despite the challenges, Fitch does not anticipate a substantial increase in mortgage arrears, bolstered by tax treatments supporting debt servicing for mortgage borrowers.
Contrary to China and Japan, Fitch projects a 4 per cent-6 per cent increase in home prices in Australia for 2024, with additional modest gains in 2025.
Strong immigration, changes in household formation, and constrained supply are identified as key drivers. The high-interest-rate environment adds an element of difficulty for homeowners to secure new mortgages, reducing the inclination to sell.
While differing in-home price trajectories, mortgage arrears across China, Australia, and Japan are expected to remain stable or experience slight increases in 2024.
Factors such as easing inflation, declining interest rates and low unemployment levels contribute to the stabilization of mortgage performance.
Australia's late-stage arrears, after a marginal uptick in 2024, are projected to realign with long-term averages in 2025. China anticipates stable mortgage serviceability with collateral default rates above pre-COVID-19 pandemic averages, reflecting a slower economic growth backdrop.
In Japan, despite monetary policy normalization and negative real wage growth, Fitch does not foresee a material increase in mortgage arrears.
Favourable tax treatments are credited for supporting debt servicing among mortgage loan borrowers. The outlook underscores the nuanced interplay of economic dynamics shaping the housing and mortgage landscape across these APAC markets.
