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Home prices forecast to fall next year

Home prices forecast to fall next year

Taipei, Dec. 23 (CNA) Home prices across Taiwan are likely to trend lower next year on expectations that an interest rate hike cycle will boost borrowing costs following the end of the U.S. Federal Reserve's quantitative easing program, online property sales agency HouseFun said Tuesday. The market has widely expected that the Fed will start to raise its interest rates in mid-2015, which could lead Taiwan's central bank to follow suit, increasing local interest rates for home mortgages. In addition, the increasing number of unsold new residential units is expected to add downward pressure on prices in the new year, HouseFun said. Home buyers could see a large chunk of unsold homes in New Taipei and Taoyuan and Hsinchu in northern Taiwan, the agency said. The result could be falling prices across most of Taiwan's major cities. In Taipei, the most expensive and most watched market, prices for 2015 could fall 10 percent from 2014, according to HouseFun's forecast. Home prices in neighboring New Taipei, the most populous city and also a target of investor attention, could drop even more by 15 percent year-on-year, while prices in Taoyuan and Hsinchu are likely to fall as much as 20 percent from a year earlier, the agency predicted. Amid caution toward the local property market next year, HouseFun said that most property developers are expected to cut construction of new residential projects for sale next year. It said that value of new property projects to be unveiled for sale in northern Taiwan over 2015 is estimated to total NT$830 billion (US$26.1 billion), down about 15 percent from the NT$980 billion seen in 2014. In Kaohsiung in the south, newly unveiled projects next year could be worth NT$100 billion, down from the NT$120 billion in 2014, though new projects in Taichung in central Taiwan could buck the downtrend to rise about 10 percent from a year earlier to NT$170 billion, HouseFun said. (By Wei Shu and Frances Huang)