The central bank’s second interest rate hike would further slow this year’s property transactions, which have plunged by double percentage points in the first five months amid rising economic uncertainty, property analysts said yesterday.
The monetary policymaker on Thursday hiked the policy discount rate by 12.5 basis points to 1.5 percent, but did not introduce further credit controls on real-estate lending as it seeks to combat inflation without overly constraining GDP growth.
“Commercial property transactions shrank 26 percent from a year earlier to NT$50 billion [US$1.68 billion] in the first five months, while land deals tumbled 47 percent to NT$70 billion, as the COVID-19 outbreak and unfavorable policy drive buyers and sellers to the sidelines,” Colliers International Taiwan (高力國際) said in a note.
Historical data show interest rate hikes and credit controls are effective in dampening purchasing interest, explaining why buyers these days hesitate to make offers, the broker said.
The rate hike, while mild and widely expected, would fuel property revaluation and raise investment hurdles, while sellers refuse to budge, making it difficult to close deals, Colliers Taiwan said.
The latest rate hike would lift the minimum yield requirement for real-estate investment from 2.345 percent to 2.47 percent, rendering qualified targets in Taipei and New Taipei City very rare in light of their soaring prices, Colliers Taiwan managing director Andrew Liu (劉學龍) said.
Liu suggested that companies with investment needs shift their focus to commercial and industrial properties, such as office buildings, factories and logistics facilities in Taoyuan, Hsinchu and Taichung.
Despite the headwinds, companies should make investment plans because the COVID-19 outbreak would be over one day and things would return to normal, Liu said.
CBRE Taiwan (世邦魏理仕), another property broker, shared similar observations, saying that land deals this year would remain above long-term averages, albeit lagging behind the level seen last year.
Residential properties would also take a hit, but at a milder scale, analysts said, as interest rates would climb from 1.65 percent now to 1.7 percent, the highest in six years.
Monthly mortgage payments would rise by NT$611 for homeowners who have taken out 30-year, NT$10 million loans — equivalent to the cost of buying one cup of bubble milk tea per day, Sinyi Realty Inc (信義房屋) said, calling the additional costs “bearable.”
However, Sinyi research manager Tseng Ching-der (曾敬德) said homeowners should brace for more interest rate hikes to 2 percent at the end of this year, if inflation fails to ease.
Evertrust Rehouse Co (永慶房屋) said people would feel the pinch when cumulative interest rate hikes reach 0.75 percentage points, from 0.375 percentage points at present.
Heavier mortgage payments would squeeze budgets for other consumption items, Evertrust Rehouse deputy research head Chen Chin-ping (陳金萍指) said, advising caution in financial planning, especially for people with relatively low incomes.
Vincent Wei led fellow Singaporean farmers around an empty Malaysian plot, laying out plans for a greenhouse and rows of leafy vegetables. What he pitched was not just space for crops, but a lifeline for growers struggling to make ends meet in a city-state with high prices and little vacant land. The future agriculture hub is part of a joint special economic zone launched last year by the two neighbors, expected to cost US$123 million and produce 10,000 tonnes of fresh produce annually. It is attracting Singaporean farmers with promises of cheaper land, labor and energy just over the border.
US actor Matthew McConaughey has filed recordings of his image and voice with US patent authorities to protect them from unauthorized usage by artificial intelligence (AI) platforms, a representative said earlier this week. Several video clips and audio recordings were registered by the commercial arm of the Just Keep Livin’ Foundation, a non-profit created by the Oscar-winning actor and his wife, Camila, according to the US Patent and Trademark Office database. Many artists are increasingly concerned about the uncontrolled use of their image via generative AI since the rollout of ChatGPT and other AI-powered tools. Several US states have adopted
KEEPING UP: The acquisition of a cleanroom in Taiwan would enable Micron to increase production in a market where demand continues to outpace supply, a Micron official said Micron Technology Inc has signed a letter of intent to buy a fabrication site in Taiwan from Powerchip Semiconductor Manufacturing Corp (力積電) for US$1.8 billion to expand its production of memory chips. Micron would take control of the P5 site in Miaoli County’s Tongluo Township (銅鑼) and plans to ramp up DRAM production in phases after the transaction closes in the second quarter, the company said in a statement on Saturday. The acquisition includes an existing 12 inch fab cleanroom of 27,871m2 and would further position Micron to address growing global demand for memory solutions, the company said. Micron expects the transaction to
A proposed billionaires’ tax in California has ignited a political uproar in Silicon Valley, with tech titans threatening to leave the state while California Governor Gavin Newsom of the Democratic Party maneuvers to defeat a levy that he fears would lead to an exodus of wealth. A technology mecca, California has more billionaires than any other US state — a few hundred, by some estimates. About half its personal income tax revenue, a financial backbone in the nearly US$350 billion budget, comes from the top 1 percent of earners. A large healthcare union is attempting to place a proposal before
RSS