Housing transactions are likely to stay flat next year from this year, as home buyers might wait until the market assimilates the US Federal Reserve’s tapering of its quantitative easing (QE) measures, property analysts said yesterday.
However, housing prices may find support in excess funds and low interest rates, although there may be heavy pressure for corrections in areas with an abundant supply of homes, they added.
“The housing market is likely to hold steady next year, as real estate continues to be Taiwanese’s favorite item in asset allocation, but soaring prices have narrowed expectations of an increase in value,” Evertrust Rehouse Co (永慶房屋) spokesman Andy Huang (黃舒衛) said.
Huang made the remark after an internal Evertrust survey showed that real-estate properties retain the title of most-favored investment vehicle this quarter, followed by stock holdings and yuan-denominated financial products.
Given the survey results and the nation’s vast excessive savings — sized at NT$1.3 trillion (US$43.79 billion) — some idle funds are expected to flow into the property sector, Huang said.
The US’ stimulus tapering may weigh on the market in the short run, but will cease to be a relevant factor in two or three months, Evertrust general manager Yeh Ling-chi (葉凌棋) said.
The market is forecast to shift its focus back to fundamentals and the global economy is expected to fare better next year than it has this year, Yeh said.
“[The US’] improving economic performance was what warranted the QE adjustment in the first place,” Yeh said.
Economic recovery abroad and at home is favorable for the local property market in the absence of major tightening measures on the horizon, he said.
A total of 360,000 housing units may be involved in transactions this year and a similar figure is expected next year as well, Evertrust said after the survey suggested that there will be heavy selling pressure ahead.
As many as 85 percent of property investors plan to post a profit after monetary authorities earlier warned the public to brace for interest rate hikes next year and the Ministry of Finance said it predicted property bubbles.
About 44 percent of poll respondents expect housing prices to pick up in the coming year, a decrease of 12 percentage points from the previous quarter, the Evertrust survey found.
The results fall in line with a confidence report released a day earlier by Cathay Financial Holding Co (國泰金控) saying that a record-high number of people believe it is wise to sell houses now, while a record-low amount want to purchase property.
“The mismatch will slow transactions,” Cathay Financial said.
Chuang Meng-han (莊孟翰), a professor of industrial economics at Tamkang University, said it is too early to gauge the impact of the US’ tapering.
However, the move will likely drive potential home buyers to the sidelines, depressing transactions in the first half of next year, Chuang said.
Home buyers will likely re-enter the market if it remains stable for a couple of quarters, as they did following the government’s imposition of the luxury tax and price registration measures, Chuang said.