Taiwanese Hesitate on Property Purchases Despite Rising Price Optimism

A recent survey reveals a cautious sentiment in Taiwan's property market. While 26.4% of respondents anticipate rising housing prices in the next quarter, a significant majority, over 80%, believe it is prudent to wait at least another year before purchasing a home. This indicates a prevailing wait-and-see attitude among potential buyers, despite a general expectation that prices will not see a substantial correction.

“

At least wait 1 year

According to Zhuang Szu-min, deputy manager of CTBC Housing's research department, the increased optimism about future housing prices is driven by several factors. These include the robust performance of the Taiwan stock market, ample market liquidity, and steady overall economic growth, all of which provide underlying support for the real estate sector. Additionally, rising global inflation, fueled by geopolitical shifts, has pushed up the prices of oil and raw materials, naturally leading to higher property values.

Government policies also play a role. The central bank's decision in the first quarter to raise the loan-to-value ratio for second-home purchases from 50% to 60% signals a more accommodative stance towards owner-occupiers. Looking ahead, potential positive influences include pre-election incentives and the upcoming "New Youth Housing" 2.0 plan. Central Bank Governor Yang Chin-long has also indicated that selective credit controls may be eased, suggesting a gradual bottoming out of the property market.

“

The stock market is too attractive to leave.

However, this optimism about prices has not translated into increased buying intentions. Zhuang points out that current housing prices remain relatively high, and the strong stock market is drawing capital away from real estate, creating a "capital crowding-out effect." Only 17.5% of respondents are willing to transfer stock market profits to the property market. Another 41.5% are waiting for further price corrections, while 10.8% plan to continue investing in the stock market without immediate plans to buy property.

“

The stock market has performed brilliantly recently, with ample market liquidity and steady overall economic growth, providing strong support for the property market.

Government initiatives aimed at housing justice, such as the NT$30 billion rent subsidy program (supported by 51.9% of respondents) and the "Old House Longevity Plan," are also being implemented. Meanwhile, the banking sector's real estate loan ratio has fallen to 35.42% as of April, a new low since July 2020, indicating the effectiveness of credit controls. The market is now focused on whether the central bank will adjust these controls at its upcoming meeting.

“

Selective credit controls will end here.