How Asia property becomes vulnerable when Fed tightens

EMERGING markets (EMs) have benefited tremendously from the sizeable liquidity injections by developed market (DM) central banks following the Lehman failure.

Among the major beneficiaries of this liquidity bonanza have been Asia's housing markets. According to the Bank for International Settlements (BIS), growth in nominal house prices ranged from 17 per cent to 130 per cent between 2008 and 2013, with an average increase of 52 per cent for the region.

However, the chapter of quantitative easing in the US has now closed, with the Fed widely expected to embark on interest rate tightening this year. Such a policy reversal could present a challenge for Asia's housing markets, particularly those facing stretched valuations fuelled by foreign credit infusion.