Small apartments this year continued to be the mainstream product in the local property market, as relocation and investment needs stalled, leaving first-time home buyers to underpin transactions, a market watcher said on Friday.
Apartments with one or two bedrooms have so far this year accounted for more than 50 percent of presale projects in northern Taiwan, replacing three-bedroom apartments as the mainstream product for the second consecutive year, Housing Monthly said.
As of Dec. 10, there were 698 presale two-bedroom apartments, making up 41.6 percent of all presale projects, while one-bedroom apartments constituted another 15.9 percent, the Chinese-language magazine said.
“Housing prices have grown increasingly unbearable and prospective buyers have no choice but to lower space expectations,” Chinese-language Housing Monthly (住展雜誌) research manager Ho Shih-chang (何世昌) said by telephone.
Lingering expectations of price falls have driven people with relocation needs to stay on the sidelines, leaving first-time home buyers with moderate budgets to sustain the market, Ho said.
Large apartments with four bedrooms were the least popular, accounting for 12.9 percent of presale projects, down 3 percent year-on-year, Ho said, adding that the downturn can be found in both downtown and suburban areas.
Two-bedroom units were more popular among investors who prefer real-estate properties to other investment tools, the magazine said.
Such apartments might generate modest rental yields of 2 or 3 percent, but it is difficult to find tenants for large luxury apartments, Ho said.
There are more than 46,000 small apartments in the nation’s six major municipalities priced at about NT$10 million (US$333,422) each, statistics from online property information provider Ubee (屋比) showed.
The offers would allow buyers to keep mortgage burdens at 30 percent of household incomes, Ubee said.
Meanwhile, property transfers have stabilized, with inheritance and gift-giving accounting for 24 percent of the volume as the nation’s population ages, Ministry of the Interior statistics show.
Property transfers have so far this year made up 65 percent of overall transactions, compared with 64.8 percent last year and 79 percent in 2007, the data showed.
Sinyi Realty Inc (信義房屋), the nation’s only listed real-estate broker, attributed the movements to improved confidence and structural demographic changes.
“More people pass on real estate as gifts and inheritance to meet asset allocation needs,” Sinyi research manager Tseng Ching-der (曾敬德) said in a report on Thursday.
The demand might pick up further speed as the population grows older, Tseng added.
Property transactions for inheritance and gift-giving reasons constituted 6 percent of total transfers in 2007, while the ratio more than doubled to 12.7 percent in 2015 and 13 percent last year, he said.
This means about one in four transactions resulted from inheritances and gift-giving, as aging Taiwanese shift wealth to the younger generations, he said.
The new tax code might weaken property-giving needs due to less tax-saving efficiency, Tseng added.
The past decade also saw fewer foreclosed properties, down to 1.2 percent of overall transfers this year, compared with 4.9 percent in 2007, government data show.
Nonetheless, ample liquidity and low borrowing costs allow property owners to weather the down cycle, Sinyi said.
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