Taiwan’s housing market is likely to remain under pressure for the remainder of the year, as property transactions plummeted more than 20 percent due to tighter credit conditions, increasing supply and ongoing economic uncertainty, according to a quarterly report released yesterday by Evertrust Rehouse Group (永慶房產集團).
Evertrust, the nation’s largest real-estate brokerage by office count, forecasts that total transactions would fall below 280,000 units for the year, with housing prices expected to continue their moderate decline, following a 1.6 percent drop in the second quarter, Evertrust general manager Yeh Ling-chi (葉凌棋) said.
“We’re not seeing a market crash, but there’s also no momentum for a rebound,” Yeh told a news conference in Taipei. “Consumers are adjusting to higher borrowing thresholds and the reality of more restrictive mortgage lending.”
Photo courtesy of Evertrust Rehouse Co
Transaction volume across Taiwan’s six special municipalities dropped 27.1 percent year-on-year from January to last month, Yeh said, citing government statistics.
Real-estate brokerages, including Evertrust, have experienced a decline in business by 40 to 60 percent compared with last year, he added.
While Taiwan’s resilient stock market and steady GDP growth have helped slow the pace of price corrections, these factors have also prolonged the adjustment period, Yeh said.
Presale home prices remain elevated in certain regions, buoyed by speculation that the government could ease credit restrictions, Yeh said.
However, such optimism faces headwinds, as a record 100,000 new housing units are slated for completion this year, stoking concerns over excess supply, particularly in central and southern Taiwan, he said.
Meanwhile, mortgage conditions are expected to remain tight. Banks are increasingly requiring stronger income documentation, particularly under the government’s New Youth Housing program, Yeh said.
Loan-to-value ratios now average at about 70 percent, and mortgage rates rarely fall below 2.5 percent, even at state-run lenders that dominate the market, he said.
More than half of transactions in Taiwan’s seven major metropolitan areas now involve price negotiations of 9 percent or more, a level not seen in six years. This growing gap between seller expectations and buyer capacity highlights the need for greater pricing flexibility, he added.
Yeh expects the market to continue following a pattern of “shrinking volume and moderate price correction.”
A sustained recovery in buying interest remains unlikely unless sellers become more willing to negotiate and adjust their asking prices, he added.
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