Asian property markets, though still relatively unaffected by the credit crunch, will soon be affected by inflation and higher interest rates, warns the Global Property Guide, because of rising food, fuel and other commodity prices.
“Higher food, fuel and other commodity prices affect the housing market negatively in several ways,” says Prince Christian Cruz, senior economist at the Global Property Guide.
“At the micro level, households may postpone their decision to purchase a new house or spend on renovation if they anticipate higher prices. At the macro level, higher food and fuel prices push inflation up. Monetary authorities typically raise key interest rates to stem inflationary pressure,” Cruz explains.
