About 44 percent of Taiwanese expect housing prices to decline next quarter, easing from 47 percent three months earlier, as the property market stays on course for a recovery, despite lingering price correction pressures, Evertrust Rehouse Co (永慶房屋) said on Wednesday.
The sentiment pickup might help facilitate transactions, which are likely to rise 9 to 12 percent to between 65,000 and 67,000 units this quarter, from the same period last year, Evertrust general manager Yeh Ling-chi (葉凌棋) said, citing a quarterly survey.
Yeh attributed the increase to healthy economic fundamentals and low borrowing costs even though residential property prices have dropped 0.2 to 2.3 percent in different parts of the nation.
That suggests a 15 percent retreat from their record high in 2014, before the government introduced a spate of measures to cool the property market.
“Transactions could slow again if sellers misread the market and refuse to concede,” Yeh said at a news conference in Taipei.
Grace periods for more than 54,000 new homes are about to expire, drastically raising debt burdens on their owners and some might opt to exit the market, he said.
For mortgage loans of NT$10 million (US$342,877), homeowners need only pay monthly interest of NT$15,000 during grace periods, the broker said, adding that monthly payments could soar to NT$56,938 if they have to pay the principal of their mortgages as well.
It is common for local lenders to offer grace periods of three to five years to attract clients.
Heavy debt burdens might drive cash-strained owners to bow out and increase selling pressure, Yeh said.
The pressure might intensify if old homes are also taken into account, as old home buyers also qualify for grace periods on property transfers, he said.
Grace period terminations would be most evident at new residential complexes in New Taipei City, Taoyuan, Hsinchu and Taichung where property funds flowed in recent years to take advantage of infrastructure enhancement and relatively affordable housing, Evertrust said.
About 70 percent of homeowners and 80 percent of prospective buyers said interest rate hikes of 75 basis points are bearable, which would lift borrowing costs to 2.5 percent, the survey found.
Against this backdrop, buyers would continue to call the shots and price concessions would remain key when closing deals, Yeh said.
The central bank kept interest rates unchanged earlier this month for the seventh consecutive quarter, but it might abandon its easy monetary policy stance if the economy grows further, he said.
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