Beware of a possible burst of the nation’s real estate bubble, analysts and academics warned yesterday.
“The market should exert discretion on property prices,” said Chang Chin-oh (張金鶚), a land economics professor at National Chengchi University.
There are signs that the market should not be too optimistic on the future of housing prices, or else investors and developers will take a hit when the bubble bursts, he told a press briefing.
Despite the recovering economy, prices of real estate in Taiwan are soaring beyond the levels ordinary people could afford as their spending power shrinks in line with stagnant paychecks.
A real estate bubble burst could take two forms, either gradually over the course of many years or an immediate explosion that would hit people’s savings deeply, Chang said.
Real estate developers should be cautious of a bubble and avoid launching too many construction projects, especially as there are many vacant houses on the market yet to be sold, said Chen Jui-ling (陳瑞鈴), deputy director-general of the Ministry of the Interior’s Architecture and Building Research Institute.
Speculative investors seeking to profit from the next wave of rising prices should also watch out because lenders are set to tighten credit and mortgage interest rates are set to rise in the near term, she said.
The chief of the central bank last month held “coffee breaks” with state-run bank executives in a bid to tighten mortgage loan credit to speculative real estate borrowers.
Chang said that with tightened mortgage lending, investors would feel the pressure and this would help reduce speculative investments — the reason behind the nation’s skyrocketing housing prices.
Meanwhile, in the survey that the research institute released yesterday, 40 percent of the property-related players polled said they expected real estate to fare better in the first quarter of next year.
While most said they expected more deals to be closed and better profits in the first quarter, they said the time it would take to close a deal would grow.
“This could mean a longer period for investors or developers in terms of their liquidity,” Chang said.
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