The central bank’s partial easing of housing loan restrictions might help the property market to avoid a hard landing as liquidity risks build up amid sluggish transactions, analysts said yesterday.
“The partial relaxation is a measured move to take some pressure from the housing market that is heading increasingly toward collapse due to excessive supply, but sluggish transactions,” Tamkang University professor of industrial economics Chuang Meng-han (莊孟翰) said.
The monetary policymaker on Thursday removed Taoyuan and New Taipei City’s Yingge (鶯歌) and Bali (八里) districts from the restriction list that limits mortgage loans to 60 percent for second homes without a grace period.
The central bank had added those areas to the tightening list in June last year, after property speculation spread from Taipei to outlying quarters of New Taipei City and Taoyuan.
The loan-to-value is also to be raised from 50 percent to 60 percent for luxury homes and corporate buyers, the central bank said.
Transactions have slumped 65.31 percent in Bali and 7.36 percent in Yingge in the past year and contracted more than 30 percent in Taoyuan, an area that gained an administrative upgrade late last year, government data showed.
“The loosening is wise and practical as liquidity risks are heightening, especially for small builders and developers that are about to complete construction on new home projects but have had difficulty finding buyers,” Chuang said.
“Unfavorable taxes and credit controls have had a negative impact on new housing projects rather than on existing homes, because new projects are more prone to speculation. While interest rates remain low, no companies can withstand inactive sales indefinitely,” he said.
The nation’s poor economic standing is fueling an unfavorable real-estate market.
The central bank might further ease credit controls if transactions remain lethargic, Chuang said, adding that mortgage restrictions still apply to Taipei and 15 popular New Taipei City districts.
“Buyers are unlikely to join the market if they believe housing prices might fall later,” Chuang said.
Credit controls aside, holding tax hikes might continue to sideline potential buyers, particularly for luxury homes in Taipei, H&B Realty Co (住商不動產) researcher Jessica Hsu (徐佳馨) said.
The Taipei City Government has imposed extra house taxes on homes built with extravagant materials and built in prime locations.
“A 10 percent mortgage difference is not likely to be strong enough to attract buyers,” Hsu said in a note.
Evertrust Rehouse Co (永慶房屋) said that nothing short of a price concession of over 10 percent can facilitate transactions.
“The easing is positive, but is would have very limited impact, if any at all,” Evertrust spokesman Andy Huang (黃舒衛) said.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
RSS