Residential and commercial property transactions in Taiwan’s six largest cities dropped by 7.7 percent year-over-year in May, with analysts attributing the dampened market sentiment to central bank rate hikes and selective credit controls targeting house prices.
According to recently released local government data, sales of homes, offices, and shops totaled 22,841 units in the six cities — Taipei, New Taipei, and Taoyuan in the north, Taichung in central Taiwan, and Tainan and Kaohsiung in the south, in May 2022, compared with 24,754 in May 2021.
In addition, in the first five months of this year, housing transactions in the six cities rose only 0.7 percent from a year earlier to 110,201 units.
Interest rate hikes
A small 1.8 percent increase between April and May has been presented as evidence of a cautious market amid expectations of further interest rate increases from Taiwan’s central bank to tackle growing inflation.
Charlene Chang (???), a section chief at Taiwan Realty Enterprise, said that many property investors were exercising caution after the central bank raised interest rates earlier this year.
In March, the central bank raised its key interest rates by 50 basis points — the first rate hike in more than a decade — following similar moves by the U.S. Federal Reserve.
With the Fed expected to raise interest rates again this month, there are expectations that the local central bank will follow suit at an upcoming quarterly policymaking meeting scheduled for June 16.
Jessica Hsu (???) of H&B Business Group said that in addition to an expected rate hike cycle at June’s meeting, the central bank could also introduce more selective credit control to cap home prices.
Contrary to market expectations, Taiwan’s central bank did not introduce new selective credit controls at its most recent policymaking meeting in March, with the bank noting that four rounds of selective credit control measures introduced since December 2020 had already slowed down home mortgage growth.
However, the central bank also said it would continue to monitor the property market and adjust its credit control policies if necessary.
Only Taipei sees sales growth
Commenting on the strong showing in housing transactions in Taipei, Lang Mei-nan (???), a research manager with Great Home Realty, said that the capital had benefited from an influx of liquidity and a growing willingness by investors to buy property to maintain the value of assets against rising inflation.
Sales of residential and commercial property hit 3,068 units in Taipei in May, up 11.7 percent from a month earlier and also up 2.3 percent from a year earlier.
In addition, Taipei also saw an increase in home transactions in Beitou District, where new residential property projects were launched to stimulate buying, Lang said.
As for the weakness in southern Taiwan in May, Lang said home prices in Tainan and Kaohsiung had hit their peaks after recent strong buying, which had deterred many investors from jumping into the market.
While Tainan saw its May housing transactions decline 11.3 percent from a year earlier but increase 15.5 percent from April to 2,233 units, transactions in Kaohsiung were down 18.8 percent from a year earlier but up 7.6 percent from the previous month to 3,648 units.
In New Taipei, housing transactions fell 12.6 percent from a year earlier and also 6.4 percent from a month earlier to 5,721 units.
In Taoyuan, housing transactions hit 3,833 units in May, down 1.6 percent from a month earlier but up 4 percent from a month earlier.
In Taichung, meanwhile, housing sales totaled 4,338 units in May, up 0.8 percent from a year earlier but down 5.1 percent from a month earlier.
Source: Focus Taiwan News Channel