The US Federal Reserve’s announcement of a planned end to its quantitative easing program cast a shadow over the local property market with fewer people remaining upbeat about the prospects for continued house price increases next quarter, while analysts expect selling pressures to heighten in districts with large supply.
Forty-eight percent of those polled expect house prices to increase in the coming three months, down from 60 percent a quarter ago, after the economy fared worse than expected, according to a survey by Evertrust Rehouse Co (永慶房屋), the nation’s largest real-estate agency by number of outlets.
“Housing transactions and prices may continue to grow in the second half from last year’s levels, but the pace may be slow compared with the first half of the year,” Evertrust general manager Yeh Ling-chi (葉凌棋) told a media briefing.
Yeh forecast the price slowdown after the US Fed on Wednesday heralded an eventual end to its bond purchases, a move that knocked 1.35 percent off the TAIEX and 0.67 percent off the value of the New Taiwan dollar yesterday.
An exit from quantitative easing will not take effect abruptly and global central banks are unlikely to act in unison, meaning it is too early to worry about quick, massive fund outflows from the property sector, Yeh said.
However, Chuang Meng-han (莊孟翰), an industrial economics professor at Tamkang University, was more pessimistic.
Chuang, who frequently advises the government on housing policy, warned of a volatile property market going forward, especially in districts with heavy supply.
The academic expects price concessions to widen in districts such as New Taipei City’s (新北市) Sinjhuang (新莊) and Linkou (林口), as well as in Taoyuan and Hsinchu counties given the large supply in recent few years.
“Those areas are susceptible to corrections because an excess of liquidity has underpinned a sizeable amount of transactions,” Chuang said. “The time for a turnaround is looming as money printing comes to an end.”
The government is likely to retain the special sales levy, also known as the luxury tax, with minimal changes to avoid unnerving the property market, while remaining wary of sustained property price rises, the academic added.
Evertrust called on the government to limit the tax to people who make profits from property deals, citing support from 43 percent of the respondents in its poll.
The levy currently subjects all houses sold within two years of purchase to a maximum tax of 15 percent of the selling price.
People in southern Taiwan remained more upbeat about house prices, with 55 percent of them expecting an uptrend next quarter, rising to 73 percent if the period is stretched to 12 months, the survey found.
The findings are consistent with housing transactions in southern Taiwan recovering to the levels seen before the imposition of the special sales levy in June 2011, while remaining weaker by between 15 percent and 32 percent elsewhere, Yeh said.