Asia is a very diverse continent, with poor countries, rapidly developing countries and developed countries. Therefore, this means that the real estate market is very different between Asian countries, for example, the real estate market in Laos is completely different from the one in Japan.
There are many people from other continents, who are thinking to buy properties in Asian continent for investments purpose or other purpose. Buying an apartment in Asia is not a simple process and it is important to take in consideration the most important objective and subjective factors during the decision-making. In addition, it is necessary to analyse the real estate market, before buying an apartment in Asia.
In this work we are going to analyse the real estate market in the Asian continent and to find in which countries the market is overvalued and in which is undervalued.
If we consider the price to income ratio, the most expensive country is Hong Kong, where are necessary 49.4 years to buy an apartment. China is in the second place with 29.1 years, followed by Taiwan with 28.9 years, Sri Lanka with 26.3 years and Nepal with 25.2 years.
If we consider price to rent ratio of the city centre, the real estate market is overvalued in Turkey, Vietnam, Pakistan, Malaysia, Thailand, Philippines, Sri Lanka, Bangladesh, India, Israel, Japan, Nepal, Singapore, Taiwan, Hong Kong, China and South Korea, so in these countries is better to rent than to buy an apartment. In Georgia, Armenia, Iraq, Cyprus, Palestine, Indonesia, Lebanon and Azerbaijan is better to rent, but not always, because under certain circumstances buying is better. The only countries where the real estate market is undervalued are United Arab Emirates, Kazakhstan, Qatar, Saudi Arabia and Jordan, so in these countries buying an apartment is better than renting.
If we consider price to rent ratio outside the city centre, the real estate market is overvalued in Pakistan, Malaysia, Bangladesh, Philippines, Thailand, India, Sri Lanka, Israel, Japan, Nepal, Singapore, Taiwan, China, Hong Kong and South Korea, so in these countries is better to rent than to buy an apartment. In Palestine, Kazakhstan, Lebanon, Armenia, Vietnam, Turkey, Azerbaijan and Indonesia is better to rent, but not always, because under certain circumstances buying is better. The only countries where the real estate market is undervalued are United Arab Emirates, Jordan, Saudi Arabia, Iraq, Qatar, Georgia, Iran and Cyprus, so in these countries buying an apartment is better than renting.
If we consider the mortgage as percentage of income, the most expensive country is Sri Lanka, where the mortgage payment is about 403.4% of the incomes. Iran is in the second place with 335.2%, followed by Nepal with 325.5%, Hong Kong with 310.6% and China with 231.3%. The less expensive countries are Qatar with 44.3%, United Arab Emirates with 31.5% and Saudi Arabia with 20.6%.
In Asian continent, there are many occasions to purchase an apartment at discount price when the real estate market is overvalued, but at the same it is necessary to be careful, because there are also many apartments at expensive price despite the real estate market is undervalued.
About the data used in this work
Real estate market analysis is made considering an apartment of 90 square meters which price per square meter is the average of price in the city centre and outside of city centre. The indicators used are:
- Price to income ratio. It is calculated by dividing apartment price to median familial disposable income for a year. Lower value is better.
- Price to rent ratio. It is calculated by dividing the apartment price to the received rent income or the estimated rent that would be paid if renting. Lower values suggest that it is better to buy rather than rent, and higher values suggest that it is better to rent rather than buy.
- Mortgage as percentage of income. It is calculated by dividing the monthly cost of the mortgage to take-home family income. Lower value is better.
The data used in this work are provided by Numbeo and are relating to 2019.