Taipei’s home prices could rise for an eighth consecutive year as a rebounding economy and overseas capital inflows outweigh government efforts to rein in values, Citigroup Inc said.
The average home price could increase by 7 to 10 percent this year in the capital, while prices in the surrounding areas could climb by 10 percent to 15 percent, Citigroup analyst Dave Chiou (邱義昇) said in a telephone interview in Taipei.
Property prices in the capital advanced 12.2 percent last year to a record, he said.
“We know the central bank will continue its tightening cycle this year, but the housing market isn’t likely to see a correction unless the key rate is higher than 3.5 percent,” Chiou said. “Money repatriation and capital inflow will continue to drive up prices.”
The central bank raised the benchmark interest rate on Dec. 30 by 0.125 percentage points to 1.625 percent amid concerns that a housing bubble is forming, citing a falling jobless rate and rising salaries as reasons for the increase.
Policymakers also increased the reserve requirement on some local-currency deposits by foreigners to as much as 90 percent, stepping up measures to counter capital inflows.
The central bank is likely to raise rates by 0.125 percentage points at each quarterly policy meeting this year, to 2.125 percent, Citigroup’s forecast said.
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