The nation’s home prices, which have fallen in the past year, ending a decade-long bull run, are poised to extend declines as the economy contracts and a new presidential administration focuses on equitable wealth distribution.
Home values in the nation dropped 1.2 percent and transactions declined 15.5 percent since the first quarter of last year, according to data from the Ministry of the Interior, while Taipei was the world’s worst property market in the year ended March among major cities tracked by Knight Frank LLP.
President Tsai Ing-wen (蔡英文), the nation’s first female president, who assumed office on Friday last week, pledged to fight a growing wealth gap and to provide affordable housing for younger generations.
“The first quarter hasn’t been good; full-year transactions year-on-year will post single-digit declines and prices might fall by 10 percent,” Arisa Liu (劉佩真), an associate research fellow at the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) in Taipei, said by telephone.
The nation unveiled measures targeted at speculators after home prices as much as tripled since 2004 amid low mortgage rates.
The central bank in 2010 started limiting the amount of funding property buyers can borrow, while a transaction tax of as much as 45 percent, which takes into account both land and home values, took effect this year.
In the year through March, prices in Taipei fell 7.6 percent to lead declines among 35 cities around the world, according to international property consultancy Knight Frank’s most recent Prime Global Cities Index.
The price drop in Taipei was bigger than the 6 percent slide in Hong Kong home prices in the period.
The average price in Taipei fell 14 percent from the second quarter of 2013 to the first quarter of this year, Knight Frank said.
Taiwan’s economy posted three straight quarters of negative growth, as exports, the biggest contributor to GDP, fell for 15 straight months amid slowing global demand.
Sentiment started slowing in late 2014 and “the money started leaving” last year, Taipei-based DTZ Cushman Wakefield managing director Billy Yen (顏炳立) said, referring to wealthy Taiwanese who started to invest outside of Taiwan.
In the wake of the new policies geared toward more affordable housing, would-be buyers found “the government is no longer friendly to the market,” Yen said.
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