Oversupply, mild rates to benefit home buyers

Mild growth

Overall, with the economy projected to see a mild expansion from last year, along with an expected halt in interest rate hikes, property sales are projected to mark a slight improvement this year.

According to the government's statistics bureau, Taiwan's GDP growth is expected to recover to 4.08 percent this year, from an estimated 3.8 percent last year.

The central bank raised its benchmark interest rate four times last year with the last hike in December bringing the rediscount rate charged to commercial lenders to 2.25 percent.

As the US Federal Reserve's rate increases seem to have come to a halt, Taiwan may follow suit, an incentive for home buyers to make their purchases this year.

The scheduled completion of several transportation lines -- including the high-speed railway, MRT system to Tucheng and Banciao in Taipei County, Sijhih Viaduct and Taipei-Ilan Freeway -- may also drive up buying along the lines, Lin said.

political influence

One potentially big impetus for the market is the easing of restrictions on major cross-strait policies, said Yeh Ling-chi (葉凌棋), president of Evertrust Rehouse.

The government was mulling allowing Chinese tourists to visit at the end of last year, as well as facilitating direct cross-strait transportation, and even opening up to Chinese investment in the nation.

Should these policies be implemented, the property market, both residential and commercial sectors, will boom due to the huge demand, Yeh said.

Grade A office space in Taipei City's Xinyi District, Dunhua circle and Minsheng area will benefit from the policies in terms of take-ups and rents, Yeh said, adding that the value of residential properties around the commercial sections, such as Songshan, Neihu and Nankang Districts, will also surge significantly.

However, the expected easing of the ban appears distant now, after President Chen Shui-bian's (陳水扁) New Year speech shed no light on this aspect.

"Cross-strait relations have become the key to determining the performance of Taiwan's stock and property markets this year," Yeh said.

Another factor that may weigh on the market are the year-end mayoral elections.

Similar to last year's campaign frenzy for local government posts which dampened the property market, the mayoral contests in Taipei and Kaohsiung cities are expected to have the same effect, Sinyi's Lin said.