Housing transactions could drop to a historical low this year due to expectations of a price drop and a dim economic outlook, even if the central bank eases mortgage terms for luxury homes, Evertrust Rehouse Co (永慶房屋) said yesterday.
The real-estate broker expects housing transactions to total from 245,000 to 255,000 units this year, the lowest in the survey’s history, unless sellers lower prices enough to facilitate deals, Evertrust general manager Yeh Ling-chi (葉凌棋) said.
The forecast represents a 13 percent decline from the 294,277 units recorded last year.
“Further interest rate cuts and eased mortgage terms are unlikely to improve the situation,” Yeh said at a news conference.
The central bank is due to review monetary policy at its quarterly board meeting today and analysts predict the bank could remove credit controls for luxury homes and cut interest rates by another 12.5 basis points in a bid to spur economic growth.
The central bank has capped mortgages at 60 percent of market value for luxury homes worth NT$70 million (US$2.16 million) or more in Taipei, NT$60 million or more in New Taipei City and NT$40 million or more elsewhere. That is 10 percent lower than average home loans.
If the forecast is correct, Evertrust said the central bank would have exhausted its policy tools given that luxury home trading has come to a near standstill, mainly due to drastic increases in prices and holding costs.
The bank has cut interest rates by 0.125 percentage points three times in the past six months, and in March it relaxed mortgage terms for houses in Greater Taipei, for multiple home ownership, and for land financing.
Transactions recovered slightly, but remained 20 percent lower than last year for the January-to-May period, Yeh said, citing government data.
“The market has yet to hit the bottom until the market stabilizes…. The government is unlikely to lend a helping hand by amending property taxes,” Yeh said.
Lower borrowing costs serve only to deepen the stalemate, making sellers more reluctant to adjust prices in the absence of cash pressures, Evertrust spokesman Lin Tai-lung (林泰隆) said.
The inflexibility is slowing transactions. One poll found that 60 percent of respondents expected housing prices to fall, and close to a majority of them were looking at corrections of between 5 and 15 percent, Lin said.
Meanwhile, 64 percent of sellers were willing to set prices slightly lower than the government’s transaction Web site recommends, Lin said.
“That is still not enough to attract buyers,” he said.
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