Taipei’s residential prices may rise 15 percent next year, more than in Singapore, Hong Kong and China, because there is more competition among homebuyers, CLSA Ltd analyst Tayher Lim (林泰禾) said.
An increasing number of would-be buyers and smaller sites being auctioned has led to stiffer competition in Taipei, Lim said yesterday. The difficulty of getting land may result in developers holding on to existing land without building new projects, causing a further supply squeeze, he said.
“Compared to Hong Kong, Singapore or China, Taiwan has more variable factors,” Lim said in a phone interview. “Most buildings are freehold in Taiwan and the government doesn’t own a significant amount of land, so there’s less it can control.”
He didn’t give a forecast for prices in the other markets.
Perng Fai-nan (彭淮南), Taiwan’s central bank governor, met executives from Bank of Taiwan (臺灣銀行), Land Bank of Taiwan (土地銀行) and Taiwan Cooperative Bank (合作金庫銀行) on Oct. 28 to tighten loan-risk management as property prices advanced, James Yue (尤錦堂), the director-general at the central bank, said on Oct. 29.
Taiwan joined Singapore, Hong Kong, India and China in moving to prevent excessive property-market swings, after falling interest rates drove prices higher. Hong Kong on Oct. 23 tightened down-payment requirements for luxury homes for the first time since 1991. A month earlier, Singapore banned interest-only mortgages for uncompleted housing.
Taiwan’s tightened lending, probably aimed at Taipei’s luxury market, is unlikely to have much impact, Lim said.
“The luxury market is less driven by debt financing and property is quite affordable outside Taipei, with less than 30 percent of household disposable income used to pay mortgages,” the analyst said.
Luxury apartments situated near Taipei 101, the world’s tallest completed building, are sold for the equivalent of US$12,368 per square meter, Lim said.
A 139m² apartment in these properties will cost US$1.7 million, compared with US$625,000 for a similar home in Beijing, US$2.6 million in Hong Kong and US$2 million in Singapore, based on calculations from CB Richard Ellis’s data.
A rebound in domestic consumer confidence and homeowners wanting to upgrade will continue to boost the Taipei market, Lim said. In Taipei City alone, more than 70 percent of housing is more than 20 years old, so there will be a natural replacement cycle, he said.
Lim says warmer relations with China will also boost the Taiwan residential property market.
“We expect more foreigners to buy properties if Taiwan opens up its economy more to China,” he said. “At the luxury end, properties in Taipei are still attractively priced compared with other Asian cities.”
Taiwan’s real estate market has been driven mainly by the domestic market, with foreigners making up 0.2 percent of property transactions, he said, citing government data.
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