Alexa
  • Directory of Taiwan

Home prices in Taiwan forecast to drop 10% annually

Home prices in Taiwan forecast to drop 10% annually

Taipei, July 25 (CNA) Residential property prices in Taiwan are likely to fall by an annual 5-10 percent over the next two years due to a supply glut and weakening affordability, according to a research report.
Taiwan Ratings, a local partner of U.S.-based Standard & Poor's, said in the report dated June 23 that Taiwan's property market is expected to encounter downside risks, reversing its sustained growth over the past five years.
Since the 2008 global financial crisis, home prices in Taiwan have increased by an average 90 percent, driven by strong speculative buying, the ratings agency said.
As a result, the high-flying home prices have become increasingly unaffordable to people in Taiwan, which in turn has caused a decline in local property transactions, Taiwan Ratings said. This situation has set the stage for a correction in residential property prices, the report said.
"Residential property prices are likely to drop gradually by up to 5-10 percent in each of the next two years," Taiwan Ratings analyst Raymond Hsu said in the report.
"We also expect activity in the commercial property sector to remain stagnant over the same period, with low rental yields and low transaction volume," Hsu said. Alongside those factors are the Taiwan's government's efforts to rein in property prices.
In the most recent measure, the Legislative Yuan in June passed a tax reform plan put forward by the Ministry of Finance to impose a capital gains tax of up to 45 percent on profits made on the sale of homes.
Taiwan Ratings said that the government's measures, along with a supply glut, may adversely affect the credit profiles of local corporations and financial lending institutions.
However, Taiwan's corporations, real estate trusts and financial institutions have enough financial cushion to withstand the impact of a modest decline in property prices and transactions over the next two years, the ratings agency said. (By Tsai Yi-chu and Frances Huang)


Updated : 2021-09-20 12:25 GMT+08:00