House prices in Taiwan might drop by double-digit percentage points next year, with correction pressures more evident in areas with heavy supply, Evertrust Rehouse Co (永慶房屋) said yesterday.
Prices are likely to fall by 7 to 10 percent in areas with real demand, but the decline would reach 10 to 15 percent in places where property speculation underpins transactions, Evertrust Rehouse general manager Yeh Ling-chi (葉凌棋) told a news conference in Taipei, citing an internal survey and data from more than 1,800 of its outlets nationwide.
Only 33 percent of respondents expect house prices to increase in the next three months, a plunge from 55 percent three months earlier, the company said.
Photo: Hsu Yi-ping, Taipei Times
After the central bank in September introduced a new wave of credit controls to induce a soft landing in the market, prices this quarter fell by between 1.6 percent and 4.5 percent in Taiwan’s six special municipalities, as well as Hsinchu county and city, Yeh said.
The downturn was also linked to higher interest rates, the survey showed.
Interest rates start at 3 percent for non-first homes as local lenders seek to slow real-estate lending, but buyers said that an interest rate of 2.75 percent would pose an unbearable financial burden, the survey showed.
Close to 65 percent of prospective buyers said that credit tightening affected their purchase decisions, while 68 percent expressed a need for a mortgage equivalent to 70 percent of their home’s value, Evertrust research manager Daniel Chen (陳賜傑) said.
Credit controls cap loan-to-value ratios of 50 percent for second houses, and the terms are even more unfavorable for third and fourth homes across Taiwan.
In addition, non-first homes are denied grace periods.
Against that backdrop, Evertrust expects house transactions next year to shrink 18 to 21 percent to 278,000 to 288,000 units, from an advance of 13 to 16 percent to 347,000 to 355,000 units this year, Yeh said.
“Corrections in the market look inevitable,” Yeh said, adding that selling pressure would intensify.
The number of homes for sale rose 17.4 percent in the second half of this year from the first half, he said.
The company also expects about 146,436 new houses to enter the market in next three years, which would sharpen selling pressure and concentration of real-estate lending, Yeh said.
The central bank would not show leniency anytime soon and sellers who intend to pull out had better make greater price concessions, he said, suggesting that a 10 percent or deeper concession would motivate buyers.
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