Taiwan’s property market will remain bullish next year, because more idle funds are likely to flow to real estate assets amid low borrowing costs after property prices repeatedly hit new highs this year, analysts said yesterday.
“Home prices in Taipei City and New Taipei City [新北市, the proposed English name of the upgraded Taipei County] may consolidate or inch up 5 percent to 10 percent next year as long as interest rates remain below 3 percent,” said Tseng Chin-der (曾敬德), a researcher at Sinyi Realty Co (信義房屋), the nation’s only listed real-estate brokerage.
Potential home buyers will start to feel the alarm when interest rates rise to 2.5 percent, as authorities may usher in more tightening measures, Tseng said. Currently, first-year mortgage interest rates average 1.62 percent and climb modestly higher in latter years, a long way before reaching the alarm level, given the central bank’s slow pace of adjustment, Tseng said.
The central bank raised the benchmark discount rate by 12.5 basis points in June and September and is expected to make a third hike in its quarterly board meeting today, analysts said.
Housing transactions totaled 328,489 units in the first 10 months nationwide and are expected to approach 400,000 units for the entire year, from 388,298 units last year, Tseng said.
“Falling unemployment and improving wages are favorable to the housing market, a trend that will become more evident next year,” Tseng said. “We expect healthy demand from people aged between 30 and 40 for their own use as well as asset allocation.”
The rising New Taiwan dollar makes real estate assets an attractive tool to fight inflation, Sinyi said in a report, adding that land developers and construction firms will launch aggressive campaigns to promote sales in March.
Commercial property trade amounted to NT$109.4 billion (US$3.6 billion) this year, rising 15 percent from last year, according to a report by Colliers International Taiwan, a property consulting firm. Land deals hit NT$222.4 billion, 1.94 times the amount last year, the report said.
The uptrend is likely to last into next year, bolstered by a scarcity of land, low capital costs and a rosy economic outlook, said Andrew Liu (劉學龍), managing director at Colliers International.
Liu expects soaring land prices, presently limited to Taipei and New Taipei City, to spread southward after the recent mergers of Taichung City with Taichung County and Kaohsiung City with Kaohsiung County. Land trade in Taichung totaled NT$11 billion this quarter alone, trailing NT$13.2 billion in Taipei, Liu said.