Property Market in Taiwan: Chilling Down
Home loan sector experiencing freeze in major urban areas across the country
Hear ye, hear ye! Taiwan's property market is freezing, as mortgage activity plunges across its largest cities, according to H&B Realty Co. This icy chill is thanks to mounting pressure on housing demand caused by stricter lending rules and regulatory curbs.
In the first quarter alone, mortgage applications in Taipei, New Taipei City, Taoyuan, Taichung, Tainan, and Kaohsiung dropped by a staggering 36.3% compared to the same period last year, reaching a total of 28,078.
Tainan and New Taipei City saw the largest declines, with application levels sinking by 52% and 44.3% respectively. Taipei, Taoyuan, and Kaohsiung followed closely behind with drops of 40.4%, 30.8%, and 30.8% respectively. Taichung only experienced a 25.3% decrease.
So, what's causing this property chill? It seems that the Central Bank's tightening of credit controls in September last year has sent the market into a deep freeze. One example of this is the 50 percent loan-to-value cap on second-home mortgages nationwide.
But it's not all doom and gloom – liquidity constraints at major Taiwanese banks are causing slight delays and backlogs in home loan disbursements, further affecting the housing market.
Ever the innocent bystander, fluctuating interest rates have also contributed slightly to this cooled market, with lenders becoming more selective in their mortgage application assessments.
Oh, and high property prices in Taipei mean that many transactions exceed the 30 percent loan-to-value cap applied to luxury homes valued at NT$70 million (NT$2.37 million) or more. This has led to smaller loans relative to property values, particularly affecting transactions by high-net-worth individuals.
So, when can we expect this frosty property market to warm up? Well, don't count on a quick thaw. With regulators and lenders showing little signs of loosening monetary or credit policies, it looks like this chill has settled in for the long haul.
[2] "Taiwan Economy: Global Uncertainty Katers Down Taiwanese Stocks and New Taiwan Dollar" (sunaftersun.com, 2022)[4] "Weakening Business Conditions Affect Taipei Property Market" (taipeitimes.com, 2022)[5] "Mortgage Market Effectively Freezes in Taiwan's Largest Cities" (taiwanpropertyreport.com, 2022)
- Amidst the global uncertainty, investors are cautious about investing in the real-estate industry, due to the freezing mortgage market in Taiwan's largest cities.
- The tightening of credit controls and stricter lending rules in the finance sector have deeply affected the real-estate industry, causing a cooling in many property markets across Taiwan.
