Shanghai residential property prices have surged 35% this year as "panic buying" has shrunk inventories, and the government has stepped in to calm the frenzy. (Reuters photo)

Although many countries in Asia have been witnessing a sudden uptick in demand for property and prices are on the rise in markets such as China, authorities remain cautious and are taking steps to ensure their markets do not start to overheat again.

Property, which in recent years has helped to create hundreds of new millionaires across the region, has been on a downtrend since hitting a peak in 2013. Prices in cities such as Hong Kong, Singapore and others have fallen by between 9% and 15%.

However there has been a revival on the mainland where prices in Tier 1 cities (including Beijing, Shanghai and Shenzhen) have risen by as much as 30% since the start of 2015.

Although China's overall property sector has seen growth of 11% since January 2015, it is not reflected in the share prices of developers, some of which are down 10-20% since the start of the year. This disconnect has prompted some analysts to conclude that the gains are not sustainable, in turn leading some investors to sell and lock in profits.

The fact is that a huge oversupply still exists in parts of China, where ghost towns featuring dozens of empty high-rises stand in mute testimony to a failed government strategy based on "if you build it they will come".

An oversupply in some sectors also is an issue in India, Thailand, Singapore, Hong Kong and some other markets across Asia.

In India, an estimated 206,000 new residential units remain unsold in the National Capital Region (NCR) that includes New Delhi, according to the property company Knight Frank. Another 181,000 units are unsold in Mumbai and clearing the inventory could take 33-42 months, say industry executives.

If the oversupply was not enough to scare investors, the decline in the transaction rates would. According to Ambit Capital, a wealth management firm, transaction rates have dropped by 10-15%.

In China, meanwhile, prices in most cities continued to surge in May. Shenzhen witnessed an increase of 53.2% year-on-year, following a gain of 62.4% in April. this year. In Xiamen, prices in May were up 28%.

Although the price gains were high, the pace is slowing as cooling measures imposed by the government start to take effect. These include tighter criteria for non-resident buying, higher down-payment requirements for second homes, and a ban on unregulated lending.

Thailand, of course, has seen the harm that property speculation can do, as everyone remembers the wild ride that ended with an economic meltdown in 1997. Ever since then, developers, bankers and authorities have all exercised prudence to ensure a new bubble does not form. The Bank of Thailand, for example, has been keeping a close eye on the flow of deposits from bank accounts to high-risk investments that include high-end condominiums.

"They contain risks and could have a long-term impact on the economy as a whole," said Veerathai Santiprabhob, the central bank governor, though he adds quickly that the possibility of a 1997-style bubble is highly remote.

In any case, weak economic growth in Thailand over the past three years has led to a downturn in the number of newly launched condominiums in central Bangkok since the fourth quarter of 2016, and in midtown and suburban condominiums since 2013. However, the supply is expected to jump in the second half of 2016.

Nine condominiums, three of them luxury developments, are scheduled to be completed in the second half after labour shortages delayed work in the first half, according to the real estate services group Jones Lang LaSalle (JLL). They will be part of a big wave of 61,000 midtown and suburban units planned to be launched in the second half of this year.

Seven new luxury condo projects were launched in Bangkok in the first quarter of 2016 with a combined sales take-up of 38% of the available units, according to JLL. But overall, upper-end condominiums continue sell well. As of the end of the first quarter of 2016, the take-up rate was 77.1% for high-end condominiums, 65% for luxury condominiums and 53.1% for super-luxury units, according to CBRE.

The Singapore property market, meanwhile, appears to be bottoming out after nearly four years of efforts by the authorities to combat overheating. Residential property prices in Singapore rose 92% from 2003 levels to their peak in 2013 but are down by 10% since then.

"In Singapore, the government actually can control the amount of supply because it is the biggest landlord; it's the one that sells the land for development," said Desmond Sim, the head of research for Singapore and Southeast Asia with CBRE.

"The government has a very strong influence. They put policies and measures in place to keep the market from overheating. That's similar to Hong Kong and China."

The government appears confident enough in the success of its cooling measures that it is now prepared to release more land.

The Ministry of National Development (MND) has released a total of 15 sites for the Government Land Sales (GLS) programme in the second half of 2016. The sites would allow 7,550 private residential units to be built, including 780 executive condominiums and a gross area of 277,100 square metres of commercial space, most of which would be for offices.

Office demand remains a question mark, however, as companies with a wary eye on the weak global economy watch their costs. The office market in Singapore has slowed markedly, with an 8.2% contraction in average rental rates in the first quarter of this year.

In Hong Kong, where supply and demand are in relatively healthy balance at the moment, price challenges persist. Even though prices have gone down by 10-15% from the peak in the second quarter of 2015, they are still up 2.9 times since the end of 2008, according to the Hong Kong Rating and Valuation Department. The local government has expressed concern that property is still highly unaffordable for the majority of people in the territory.

Although 205 high-end property projects were launched in Hong Kong in the first quarter of 2016, the capital value of the high-end market decreased by 0.4%, compared with the fourth quarter of 2015, the first drop since the fourth quarter of 2014.

JLL believes the capital value of the high-end market in Hong Kong could decline by as much as 5% in the future as moderation in rental rates hastens the decrease. However, Hong Kong high-end houses for purchase are still attractive to people with enough cash in hand.

Hong Kong residential property prices overall have risen by as much as 370% since 2003 and although they are down by 13% since September last year, a new boom is starting to emerge in some segments.

The Hong Kong office market, meanwhile, is now the priciest in the world, according to a report issued this month by CBRE. Office occupancy costs are rising throughout most of Asia Pacific, although they have declined in Singapore and Jakarta.

Bangkok, meanwhile, ranked a very attractive 109th among 126 cities surveyed, with an average prime Grade A office rent of 959 baht per square metre per month, 9.5 times cheaper than in Central in Hong Kong.

"Bangkok office demand has remained strong despite the weak economy and this, combined with the limited amount of new space completed, will continue to push up rents," said Nithipat Tongpun, head of office services with CBRE Thailand.

Shanghai property prices, meanwhile, have surged. "In the first three months of this year, Shanghai's residential market showed signs of panic buying, with people queueing up for home purchases in the sales rooms. Coupled with limited new supply, robust sales led to declining inventories in Shanghai's residential market, which fuelled a surge in prices in the first quarter of 2016," Joe Zhou, head of research for Shanghai with JLL China, told Asia Focus.

From January to April this year, price growth exceeded 35% year-on-year, according to Carlby Xie, head of research for China with Colliers International.

In order to cool down the overheated property market in Shanghai, the local government has tightened rules for second-home purchases and added new qualifications for non-locals to buy houses. JLL predicts that the measures will calm the frenzied market and bring prices back under control.

In Shanghai, transactions in the primary property market are at a 10-year peak, while sales in the high-end market in the first quarter of 2016 reached 872 units, an increase of 173% year-on-year.

In the first quarter, only one new project, Hysun Chairman in Pudong district, was launched with 216 high-end houses. Because of the shortage of new projects, the estimated time needed to clear the high-end inventory is now down to 8.4 months, compared with a worrisome 30 months in the third quarter of 2014.

In Vietnam, meanwhile, the government made headlines with a major policy change that allows foreigners to buy residential properties. However, it's not clear how many foreigners will take up the offer, as financing purchases through local banks could remain a challenge.

As Mr Sim of CBRE put it: "The exuberance of the supply in Southeast Asia cannot match up with the cutback in demand."