The housing market in Taipei City showed a double-digit rebound last month after declining to an 18-month low one month earlier as cautious sentiment eased somewhat, the latest data from the Taipei City Government showed yesterday.
Transactions, however, remained low compared with the level before the central bank adopted selective credit controls in June to cool the property market, the data showed.
Residential real estate transactions in Taipei City totaled 4,501 units last month, rising 17 percent from 3,850 units in August, the statistics said. The latest figure still marked a 19.18 percent drop from an average of 5,569 units in the first half.
The rebound is expected to last into the current quarter, the traditional high season, real estate analysts said.
Lee Jain-ming (李健銘), a researcher at Sinyi Realty Co (信義房屋), the nation’s only listed real estate agency, said uncertainty about the market outlook continued, but confidence recovered slightly as the central bank did not introduce fresh tightening measures at its board meeting last month.
The monetary policymaker raised key interest rates by 12.5 basis points for the second time this year on Sept. 30 and urged local lenders to enhance risk management on land financing.
In June, the central bank asked banks to tighten credit for second-home loan applications, lowered the loan-to-value ratio and canceled grace periods on principal payments for housing units in Taipei City and 10 areas in Taipei County.
Taipei City alone accounted for more than 50 percent of residential real estate transactions nationwide in the first six months, according to the Ministry of the Interior’s data.
“The cautious sentiment may ease further for the rest of the year while housing prices continue to consolidate,” Lee said.
Many Taiwanese get married in the fourth quarter and buy apartments on their own or with help from parents to start a new family.
Ni Tzu-jen (倪子仁), spokesman for the Chinese-language Housing Monthly (住展雜誌), said the central bank’s tightening measures have slowed housing transactions, but have proven ineffective in curbing their prices.
The interest rate hikes add slightly more than NT$100 (US$3.20) per month for every NT$1 million borrowed, while the call to limit financing is little more than moral preaching, Ni said.
“Nothing short of sharp interest rate hikes can prevent funds from flowing into the property market,” Ni said. “But I don’t think the central bank will take drastic steps, as they may hamper the economic recovery.”
Ken Shih (施耕宇), financial analyst from BlackRock Investment Taiwan Ltd, said Taiwan’s mortgage market remains healthy in light of the current non-performing loan ratio ranging from 0.5 percent to 1 percent.
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