The central bank has sounded an alarm over the risk of a price bubble burst in Taiwan’s real estate market. The amount of empty housing units is approaching an historical high, while property prices also remain stubbornly high despite oversupply.
What this signals is that the central bank’s credit-tightening measures have not been enough to keep the property market in check.
A central bank report released on Friday shows that at the end of last year, about 1.43 million housing units were sitting empty, based on electricity meters registering almost zero consumption in the past year. That is a 1.13 percent increase from 2011. Empty housing is just several steps away from the record high set in 2009 of just under 1.5 million units.
Last year, property transactions shrank 8.84 percent to 330,000 buildings, the lowest level in 10 years. This came in the wake of the government’s introduction of a luxury tax two years ago and ahead of a new transaction registration rule based on market value that took effect this year.
In contrast, property prices rose 7.48 percent last year on an annual basis, the central bank said, citing a real estate survey released by a property research team at Cathay Financial Holding Co.
However, the central bank said that oversupply could continue, with developers and construction companies planning to put more apartments on the market, which could lead to a price decline. A burst real estate bubble could lead to a property price crash and rock the nation’s financial stability, the central bank said.
Given that the alarm came just ahead of the bank’s board of directors meeting at the end of this month, there was renewed speculation that the bank is set to extend its credit tightening measures from northern urban districts in the Greater Taipei area to more areas such as Taoyuan County.
During the last board meeting three months ago, the bank did not tighten credit rules on loans, despite some economists thinking this would help cool down the housing market.
The property market is seen as a growth engine for most economies, but there is no sign that Taiwan’s booming real estate market will lead to a pick-up in the economy anytime soon.
Instead, the nation’s economy is losing steam as slumping demand from overseas erodes its strength. This has forced the government to cut its GDP growth forecast to 2.4 percent annually from the original expansion target of 3 percent.
The government should listen carefully and be cautioned against allowing the real estate bubble to burst. Obviously, not only the central bank, but other governmental departments need to take more steps to bring the market back and to prevent it from the sort of overheating that ultimately led to economic recession in Spain last year and Japan two decades ago.
To drive liquidity from the real estate market, the government should create more investment tools and relax the ban on local life insurers investing in public construction projects.
Local life insurers typically invest heavily in the property market in search of high returns from leveraging low interest rates. A relaxation would help divert this capital away from the housing market and would also help the government finance public construction projects.
Congressman Mike Gallagher (R-WI) and Congressman Raja Krishnamoorthi (D-IL) led a bipartisan delegation to Taiwan in late February. During their various meetings with Taiwan’s leaders, this delegation never missed an opportunity to emphasize the strength of their cross-party consensus on issues relating to Taiwan and China. Gallagher and Krishnamoorthi are leaders of the House Select Committee on the Chinese Communist Party. Their instruction upon taking the reins of the committee was to preserve China issues as a last bastion of bipartisanship in an otherwise deeply divided Washington. They have largely upheld their pledge. But in doing so, they have performed the
It is well known that Chinese President Xi Jinping’s (習近平) ambition is to rejuvenate the Chinese nation by unification of Taiwan, either peacefully or by force. The peaceful option has virtually gone out of the window with the last presidential elections in Taiwan. Taiwanese, especially the youth, are resolved not to be part of China. With time, this resolve has grown politically stronger. It leaves China with reunification by force as the default option. Everyone tells me how and when mighty China would invade and overpower tiny Taiwan. However, I have rarely been told that Taiwan could be defended to
It should have been Maestro’s night. It is hard to envision a film more Oscar-friendly than Bradley Cooper’s exploration of the life and loves of famed conductor and composer Leonard Bernstein. It was a prestige biopic, a longtime route to acting trophies and more (see Darkest Hour, Lincoln, and Milk). The film was a music biopic, a subgenre with an even richer history of award-winning films such as Ray, Walk the Line and Bohemian Rhapsody. What is more, it was the passion project of cowriter, producer, director and actor Bradley Cooper. That is the kind of multitasking -for-his-art overachievement that Oscar
Chinese villages are being built in the disputed zone between Bhutan and China. Last month, Chinese settlers, holding photographs of Chinese President Xi Jinping (習近平), moved into their new homes on land that was not Xi’s to give. These residents are part of the Chinese government’s resettlement program, relocating Tibetan families into the territory China claims. China shares land borders with 15 countries and sea borders with eight, and is involved in many disputes. Land disputes include the ones with Bhutan (Doklam plateau), India (Arunachal Pradesh, Aksai Chin) and Nepal (near Dolakha and Solukhumbu districts). Maritime disputes in the South China