Tue, Jul 09, 2013 - Page 13 News List

Concerns over end of QE weigh on housing market

CAUTIOUS:Sixty-three percent of respondents polled by Sinyi Realty said it was a bad time to buy real estate after reports that the US would end its monetary stimulus

By Crystal Hsu  /  Staff reporter

Most Taiwanese think it is unwise to buy property this quarter because of concerns that real-estate prices may fall once the US Federal Reserve starts to taper off its quantitative easing (QE) measures, Sinyi Realty Inc (信義房屋) said in a report yesterday.

The findings did not bode well for home transactions, which have already seen a noticeable drop last month from May, despite the continued rise of housing prices over the past months.

BAD TIMING

A total of 63 percent of respondents polled by Sinyi thought it was a bad time to buy real estate, as reports about the end to the US’ monetary stimulus are rocking global financial markets.

The local bourse closed down 1.44 percent yesterday, in line with other Asian markets after US employers added a higher-than-expected 195,000 new jobs last month, deepening worries that the Fed will stop QE because the US economy improves, Allianz Global Investors Taiwan Ltd said in a statement.

“Prospective home buyers are likely to wait and see how the QE drama unfolds,” Sinyi Realty researcher Tseng Chin-der (曾進德) said.

VOLATILITY

Ongoing financial market volatility has driven an increasing number of respondents to hold on to their cash, which Tseng said is a wise move.

Taiwan Realty Co (台灣房屋) said housing transactions are likely to decrease in the short term, but home prices may hold steady.

“The US ending its QE should not be seen as a negative development as it confirms that the US economic recovery is on track,” Taiwan Realty manager Jack Chou (周鶴鳴) told a media briefing.

A recovering US economy suggests stronger demand for consumer electronic gadgets, a positive sign for Taiwan, since the nation is home to the world’s largest contract chipmakers, chip designers and critical component suppliers, Chou said.

RATES CLIMB

Apart from home prices and locations, interest rates top the list of concerns among local home buyers, Taiwan Realty said in a survey, after interest rates on US mortgage loans climbed to 4.5 percent at the end of last month from 3.35 percent in May.

On average, home owners in Taiwan spent NT$26,000 per month in 27.56 years of mortgage payments, the survey showed.

Favorable interest rates may save homeowners significant borrowing costs if they compare bank offers beforehand, Chou said.

Taiwan Realty yesterday launched an online service allowing homeowners to compare borrowing costs among a dozen lenders.

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