Taiwan’s property market might face transaction and price corrections this year, with commercial and residential properties, as well as land affected, as soaring prices limit buying interest, Cushman & Wakefield Taiwan said yesterday.
“House prices per unit hit a record last year because developers rolled out small apartments to make them appear relatively affordable,” Cushman & Wakefield Taiwan managing director Billy Yen (顏炳立) told a news conference in Taipei.
The trend indicated that in addition to location and environment considerations, affordability is crucial to facilitate sales and further price hikes would drive away potential buyers, Yen said.
Photo: Hsu Yi-ping, Taipei Times
People who disagree could put houses they purchased in the past two years on the market and see if they can find buyers willing to pay similar prices, he said.
The buying spree induced by favorable lending terms for first-home purchases would prove transient this year in the absence of price concessions, he said.
Market players have sought to project a general sense of euphoria that runs counter to reality, he said, adding that transaction data last year support his observations.
Land deals last year plunged 34 percent from 2022 to NT$112.9 billion (US$3.64 billion), while commercial property transactions rose mildly to NT$130.19 billion, Cushman & Wakefield Taiwan said.
The small increase in commercial property trading had a lot to do with the liquidation of the Shin Kong No. 1 REIT fund (新光一號), which sold its six buildings in Taipei for a combined NT$30.7 billion, Cushman & Wakefield Taiwan valuation and advisory services head Charlie Yang (楊長達) said.
There are no REIT fund liquidity attempts on the horizon, which would weigh on transactions this year, Yang said.
It remains to be seen if domestic life insurers would rejoin the market after remaining on the sidelines last year due to stiffer yield requirements amid monetary tightening, he said.
That left self-occupancy needs from corporations to underpin the commercial property market, he said.
Another concern is that urban renewal projects and joint ventures could slow this year as developers turn cautious to cope with mounting construction costs and unfavorable investment terms, Yen said.
The market for land could fare better on the back of solid demand if sellers lower prices by 5 percent, he said.
Spiking prices for industrial plots of land last year put pressure on corporate profit, fueling caution on the part of prospective buyers, the company said.
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