Housing transactions would likely hold steady or grow mildly next year, from an estimated 7 percent gain this year, as excessive liquidity and economic recovery would continue to lend support, Evertrust Rehouse Co (永慶房屋) said, but added that credit controls would likely slow the advance.
The number of transactions approximated 291,194 from January to last month and would total 322,000 to 324,000 units for the whole of this year, representing an annual increase of 7.1 percent, Evertrust general manager Yeh Ling-chi (葉凌棋) said, citing an internal survey.
The volume could hit 325,000 to 350,000 next year, suggesting a flat showing to a rise of up to 3 percent, as tightening measures would mildly discourage developers and builders, Yeh told a news conference in Taipei on Thursday.
“While continued low interest rates and excessive liquidity are favorable for the property market, tightened loan-to-value ratios would drive property investors and speculators to the sidelines,” he said.
The central bank’s credit controls, aimed at lowering lending for home purchases by companies and multiple home owners, unsold houses and land financing from 80 percent to 50 to 65 percent would be prudent and effective, Yeh said.
Additionally, the Ministry of Interior has banned transfers of unlicensed presale housing projects and the Financial Supervisory Commission has stepped up inspections of real-estate lending, he added.
All the measures are intended to curb property investment or speculation and would not affect first-home purchases or urban renewal projects, Yeh said.
Property investment, fueled by monetary easing to mitigate effects of the COVID-19 pandemic, would have to produce more capital, Yeh said, adding that in the past few years, individuals have created shell companies to dodge heavy taxes on property gains.
Easy loans and low borrowing costs have driven developers to acquire land plots and launch new projects using land and unsold houses as collateral, Yeh said, adding that the practices could lead to a supply glut and subsequently to heavy selling pressure, if left unchecked.
Housing prices have this year climbed to record highs in most parts of Taiwan, especially in Taoyuan, Hsinchu and Taichung, although some areas fail to report companies returning from China, Yeh said.
The stricter measures mean that developers would have to try to sell finished but unsold houses first, now that their access to capital is significantly limited, Yeh said.
That would slow the recovery in the real-estate market, but support its long-term health, Yeh said.
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