The central bank’s latest 0.125 percentage point rate increase would further dampen buying interest in residential and commercial properties, after transactions in the first eight months of the year slipped into contraction territory amid economic uncertainty, analysts said yesterday.
The central bank on Thursday raised interest rates by 12.5 basis points, in line with market expectations, after Taiwan’s consumer price growth last month exceeded the 2 percent alert level, but is expected to decline below the threshold next year.
The tightening would lift interest rates on first-home mortgages to 1.82 percent and higher for luxury homes and multiple mortgages, said Tseng Ching-der (曾敬德), research manager at Sinyi Realty Inc (信義房屋), Taiwan’s only listed broker.
For home owners who take out NT$10 million (US$31.58 million) in a 20-year mortgage, this year’s rate increases would add NT$2,313 to their monthly payments, Tseng said.
That would have prospective home buyers think twice before joining the market amid rising food and energy costs, Tseng said.
Sellers who are eager to exit the market next quarter would have to be flexible about their target prices, the analyst said, citing a recent survey that showed more than 55 percent of potential buyers would cut their budget or postpone purchases to grapple with rising interest rates.
The bleak picture would extend to the commercial property market, after land and property deals sank 20.3 percent year-on-year in the first eight months, property consultancy CBRE Taiwan said.
The latest rate hike would raise the required minimum returns on real-estate investments on the part of life insurers to 2.595 percent, a difficult challenge to overcome for objects in central locations, CBRE Taiwan said.
Life insurers would focus on investment targets that generate 2.7 percent in returns, as the central bank might raise the interest rate again in December, it said.
Continued property price increases would add difficulty to life insurers’ search for suitable objects, although domestic firms would remain willing to increase real-estate stakes, it said.
CBRE Taiwan is looking at further double-digit percentage declines in commercial property trading, as land owners would largely refuse to make concessions.
Drastic rate hikes by the US Federal Reserve would increase the chance of a hard landing in the US economy, which would be unfavorable for Taiwanese exports, the consultancy said.
The Fed raised interest rates by 0.75 percentage points earlier this week and indicated that further rounds of monetary tightening would be needed to tame inflation.
Intel Corp chief executive officer Lip-Bu Tan (陳立武) is expected to meet with Taiwanese suppliers next month in conjunction with the opening of the Computex Taipei trade show, supply chain sources said on Monday. The visit, the first for Tan to Taiwan since assuming his new post last month, would be aimed at enhancing Intel’s ties with suppliers in Taiwan as he attempts to help turn around the struggling US chipmaker, the sources said. Tan is to hold a banquet to celebrate Intel’s 40-year presence in Taiwan before Computex opens on May 20 and invite dozens of Taiwanese suppliers to exchange views
Application-specific integrated circuit designer Faraday Technology Corp (智原) yesterday said that although revenue this quarter would decline 30 percent from last quarter, it retained its full-year forecast of revenue growth of 100 percent. The company attributed the quarterly drop to a slowdown in customers’ production of chips using Faraday’s advanced packaging technology. The company is still confident about its revenue growth this year, given its strong “design-win” — or the projects it won to help customers design their chips, Faraday president Steve Wang (王國雍) told an online earnings conference. “The design-win this year is better than we expected. We believe we will win
Chizuko Kimura has become the first female sushi chef in the world to win a Michelin star, fulfilling a promise she made to her dying husband to continue his legacy. The 54-year-old Japanese chef regained the Michelin star her late husband, Shunei Kimura, won three years ago for their Sushi Shunei restaurant in Paris. For Shunei Kimura, the star was a dream come true. However, the joy was short-lived. He died from cancer just three months later in June 2022. He was 65. The following year, the restaurant in the heart of Montmartre lost its star rating. Chizuko Kimura insisted that the new star is still down
While China’s leaders use their economic and political might to fight US President Donald Trump’s trade war “to the end,” its army of social media soldiers are embarking on a more humorous campaign online. Trump’s tariff blitz has seen Washington and Beijing impose eye-watering duties on imports from the other, fanning a standoff between the economic superpowers that has sparked global recession fears and sent markets into a tailspin. Trump says his policy is a response to years of being “ripped off” by other countries and aims to bring manufacturing to the US, forcing companies to employ US workers. However, China’s online warriors