Home sales may reach 368,600 units this year, rising 11.85 percent from 329,700 last year, as a focus by developers on small, but relatively affordable apartments in suburban areas pays off, Chinatrust Real Estate Co (中信房屋) said.
Builders and developers scrambled to supply small apartments in Taipei or relatively affordable housing in New Taipei City (新北市), Taoyuan and Hsinchu to take advantage of new public transportation facilities, the broker said.
“The strategy made sense amid rising home prices and stagnant wages. It successfully attracted first-time home buyers to Linkou District (林口), Tamsui (淡水), Shulin District (樹林) and parts of Taoyuan, which are to be linked to the mass rapid transit [MRT] system,” Chinatrust Real Estate vice chairman Richard Liu (劉天仁) said in a report.
The estimated double-digit increase bucked expectations of price corrections after home sales dropped to 329,700 units last year, the lowest since 2002, due to an economic slowdown and unfavorable policy measures, the broker said.
Sell-off expectations of houses purchased for two years or longer are not being realized even though the properties are not subject to the special sales levy, Liu said.
Chinatrust Real Estate forecast the housing market would hold steady with transactions expected to be between 350,000 and 370,000 units next year.
Expectations of more tightening measures and interest rate hikes may hinder trading as the nation is due to elect new city and county mayors next year and politicians may campaign on housing justice, the broker said.
Talks of tightening measures suffice to drive prospective buyers to the sidelines as seen last year ahead of the presidential elections, and soaring housing prices continue to top the public’s list of concerns, Liu said.
The government has indicated plans to keep the special sales levy mostly unchanged, but may seek to increase holding costs for owners of multiples home to win votes, the broker said.
Meanwhile, the US Federal Reserve is likely to scale down quantitative easing (QE) next year as the US economy recovers further, a move that may set interest rates on the rise across the world, Chinatrust Real Estate said.
Taiwan’s central bank may follow suit and raise interest rates after having left borrowing costs intact since June 2011, the broker said.
“The potential QE exit and interest rate hikes would prompt buyers to think twice when making purchasing decisions,” Liu said.
The commercial property segment is faring poorly this year, with transactions declining by 30 percent to about NT$80 billion (US$2.69 billion) thus far, a separate report by CCIM Taiwan (台灣不動產投資協會) said.
The figures lag behind the NT$85 billion recorded in 2008 amid the global financial crisis as life insurers are for the most part banned from property investment, the report said.