Taipei’s home prices will rise for a seventh consecutive year as an economic recovery and demand from the nation’s wealthy outweigh government efforts to rein in prices, the nation’s biggest property broker said.
Residential prices in metropolitan Taipei may increase by 5 percent to 10 percent this year, Lee Jain-ming (李健銘), a researcher at Sinyi Realty Co (信義房屋), said in a telephone interview yesterday.
“Improving ties with China and the relatively stronger economic recovery in Asia than in Europe and the US will continue to prompt wealthy Taiwanese to repatriate their money,” Lee said. “Taiwan’s recent tightening measures on mortgages won’t affect these wealthy buyers as they have plenty of cash and don’t rely heavily on bank loans.”
The financial regulator has asked the bankers’ association to tighten lending procedures and ensure the quality of loans after banks cut mortgage lending rates to the lowest level since records began, driving prices of residential property in Taipei up 20 percent to their highest level ever last year.
Prices in Taipei climbed 4.8 percent in the first quarter, Lee said.
Central bank Governor Perng Fai-nan (彭淮南) said in March that property prices were high in three major metropolitan areas and pledged to impose “prudent” measures on property lending to prevent asset bubbles.
Land Bank of Taiwan (土地銀行) and Bank of Taiwan (臺灣銀行) raised mortgage rates and cut the amount of loans for buyers of luxury homes and property investors as the state-owned lenders sought to reduce speculation and credit risk.
“Liquidity isn’t a big concern for property investors since they can turn to private banks for loans,” Lee said. “It’s the cost of money that will make a difference.”
Consumer prices last month rose for a fourth consecutive month on higher oil costs, the Directorate-General of Budget, Accounting and Statistics said this week.
Accelerating inflation may prompt the central bank, which has kept its benchmark interest rate at a record-low 1.25 percent since March last year, to tighten policy, Leong Wai Ho (梁偉豪), a Singapore-based economist at Barclays PLC, said this week.
Leong forecasts a 0.125 percentage point rate increase at the bank’s board meeting next month.
“If the interest rate rises in the third quarter, home prices will start to drop in the final three months of the year after peaking in the current quarter,” Lee said.
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