Property transactions last month totaled 18,477 units in the nation’s six special municipalities, shrinking 13 percent from one month earlier, as buying interest cooled further amid lingering COVID-19 infections and unease over an economic slowdown, data from respective local administrations showed on Monday.
The pace of retreat is more evident in central and southern Taiwan, where developers have raised prices steeply on the back of major local tech firms’ plans to build new plants.
The data for last month should be the poorest this year, as they reflected mainly deals taking place in June when daily COVID-19 cases were high, analysts said.
Photo: Hsu Yi-ping, Taipei Times
However, the situation would not improve much going forward, amid expectations of more interest rate hikes and the negative wealth effect linked to a stock market rout, they said.
Kaohsiung reported the biggest monthly fall of 20.2 percent to 2,680 units, the lowest record for July in 21 years, Evertrust Rehouse Co (永慶房屋) assistant manager Chen Chin-ping (陳金萍) said.
Sharp price increases in the southern port city prompted buyers to turn cautious after economic indicators showed signs of a slowdown, Chen said.
Compared with June, housing transactions in Tainan slumped 18.2 percent to 1,836 units and tumbled 17.6 percent to 3,452 in Taichung, data from local governments showed.
Interest rate hikes tend to drive buyers to the sidelines, Chen said.
Lending costs for new mortgages rose to a two-and-a-half-year peak of 1.614 percent in June and would climb higher to reflect the central bank’s second rate hike in June, she said.
Pundits are looking at two more rate adjustments this year barring a significant slowdown in consumer prices, from more than 3 percent now.
Home deals in New Taipei City fell 12.9 percent to 4,697 units and declined 7.3 percent to 2,273 units in Taipei. Taoyuan was relatively resilient, posting a smaller 3.4 percent drop to 3,539 units.
Stock rallies last year helped the housing market to rapidly emerge from the level 3 COVID-19 alert, but deep corrections this year would intensify the negative wealth effect, which is unfavorable to home purchases, Sinyi Realty Inc (信義房屋) said.
“A revenge recovery” is unlikely this year, although the number of COVID-19 cases has steadily declined since June, Sinyi research manager Tseng Ching-der (曾敬德) said.
Both analysts said the market would remain soft for the rest of the year as monetary tightening and economic uncertainty would continue to weigh.
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