Building completions surge in Taiwan, but actual market demand remains severe

Taiwan is experiencing a significant wave of property completions, with the number of newly registered buildings surpassing 150,000 units for two consecutive years. Last year alone, 176,700 new buildings were registered, marking a substantial 44.48% increase compared to 2016 figures. This trend suggests a robust period of construction activity, even as the broader market faces challenges.

However, this surge in completed properties contrasts sharply with actual buyer demand, which remains subdued. The overall volume of property transactions has seen a decline, with a 3.5% year-on-year decrease in the first five months of this year across six major cities. Taichung, in particular, experienced a significant slump, with transaction volumes dropping by over 10%.

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Last year's transaction volume was a reflection of sluggish demand, and it included the handover of some new housing projects. Therefore, actual market demand may be more severe than the data suggests.

Despite the current market sluggishness, real estate professionals anticipate a gradual recovery in transaction volumes during the second half of the year. This optimism is partly fueled by recent adjustments to mortgage regulations, including a slight easing for second-home buyers, which may signal a bottoming out of market activity. Historically, periods of sharp volume contraction have often been followed by a rebound.

Geographically, Taoyuan has emerged as a key area for new constructions, registering 30,600 new buildings last year, surpassing even the most populous New Taipei City and the long-leading Taichung. This growth is attributed to factors like the high housing costs in Taipei and the economic benefits of the region's transportation infrastructure, which continue to attract migrants. In contrast, areas like Hsinchu City have seen consistent annual declines in new registrations.

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However, usually after a sharp volume contraction, the following year has the potential for a rebound. Past experiences have shown similar trends, and this year, with the central bank slightly easing mortgage lending for second homes, market demand shows signs of bottoming out and recovering.