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More people expect property prices to fall in the next year

“Record-high property prices are fueled by low interest rates, and the desire to pursue value is particularly strong in a weak economy.” — Wey Jang-jyh, property analyst

An increasing number of Taiwanese are predicting that house prices will fall on speculation that the central bank will raise borrowing costs next year, the nation’s biggest real estate broker said.

Sinyi Realty Co (信義房屋) said 33 percent of people surveyed this month anticipate a fall in house prices in the next 12 months, compared with 28 percent in a July poll. That’s the first increase since the fourth quarter of last year, when two-thirds foresaw a drop after Lehman Brothers Holdings Inc collapsed.

“Record-high property prices are fueled by low interest rates, and the desire to pursue value is particularly strong in a weak economy,” Wey Jang-jyh (魏彰志), a property analyst at Fubon Securities Co (富邦證券), said in a telephone interview yesterday. “It won’t last much longer, since the market expects the central bank to shift to a tightening monetary policy next year.”

Australia’s central bank raised its benchmark interest rate from a 49-year low on Oct. 6 and signaled further increases. The country was the first G20 nation to raise borrowing costs since the global financial crisis hit more than a year ago. Policymakers from India to South Korea are also considering exiting stimulus measures.

Taiwan’s central bank last month left borrowing costs unchanged after cutting the benchmark rate seven times since September last year to a record-low of 1.25 percent.
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