H&B Realty Co (住商不動產) and Chinatrust Real Estate Co (中信房屋) yesterday reported steep declines in their house transactions last month, as the central bank’s latest credit control measures drove prospective buyers to the sidelines.
H&B observed a 26.4 percent retreat in its house deals nationwide last month from August, saying the fall widened to 28.6 percent compared with the same period last year.
H&B research manager Jessica Hsu (徐佳馨) attributed the poor showing squarely to the central bank’s latest credit controls under which home buyers would need to put up down payments of 50 percent to 70 percent if they already own real estate, even partial ownership of real estate gained from inheritance.
Photo: Hsu Yi-ping, Taipei Times
While tightened lending terms won’t affect first homes for self-occupancy, their review process has grown stricter and longer, which is also unfavorable for the market, Hsu said.
Tightened reviews came due to government suspicions about dummy buyers and other misuses of preferential lending terms designed to help people buy their first home for self-occupancy.
House transactions in Taipei tumbled 31.9 percent month-on-month, shrinking 30.9 percent and 41.4 percent in New Taipei City and Taoyuan respectively, H&B said, adding that Taichung recorded a 24.6 percent decrease.
The situation is less abysmal in southern Taiwan, where house deals fell 9.1 percent in Tainan and 9.8 percent in Kaohsiung, H&B found.
Likewise, Chinatrust observed a 15.9 percent fall in its house deals across Taiwan last month from August. The decrease stood at 12.3 percent year-on-year, it said.
House deals reduced 18.3 percent in Taipei, dropped 15.7 percent in New Taipei City and shrank 10.7 percent in Taoyuan, the broker said. The slowdown was 16.7 percent in Taichung, 18.5 percent in Tainan and 18.2 percent in Kaohsiung, it added.
House-buying fever in the first half of this year started to cool in August when the central bank indicated it met with local banks and cooperatives for talks about their mortgage operations.
The monetary policymaker repeatedly voiced concerns over a potential overconcentration of real estate lending, which it warned could squeeze loans for other sectors and pose a threat to the financial system’s health and stability, in the event of house price corrections.
Conservative sentiment grew more evident last month and might not dissolve any time soon, as many local lenders are approaching their house loan limit, Chinatrust said.
As before, investors would first feel the pinch and flee the market, leaving people with real demand to underpin deals, it said.
The situation would deteriorate, as the central bank said it would keep a tight rein for at least a year, though it could consider making exceptions for “innocent” buyers, if necessary, both H&B and Chinatrust said.
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