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.
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