TAIPEI (Taiwan News) — Central Bank Governor Yang Chin-long (楊金龍) said Thursday that Taiwan’s housing market has yet to achieve a soft landing, and acknowledged that the government’s youth housing support policy has come at a high cost to the Central Bank.
After the Central Bank rolled out its seventh round of housing credit controls last year, domestic property transactions declined, per Rti. The bank said that loan-to-value ratios have been constrained, expectations of rising home prices have eased, and both transaction activity and the pace of price increases have slowed.
The ratio of real estate lending to total lending across all banks, known as the real estate loan concentration, edged down from a peak of 37.61% at the end of June last year to 36.7% at the end of November this year. In addition, year-on-year growth rates for outstanding real estate loans, home purchase loans, and construction loans have all trended lower, standing at 3.79%, 4.81%, and 0.68%, as of the end of November.
However, the share of home purchase loans granted to buyers without owner-occupied housing has continued to rise. Meanwhile, the proportion of urban renewal and dilapidated housing reconstruction loans in total construction lending has also increased.
Despite overall improvements in many indicators related to housing market controls, the Central Bank chose not to ease restrictions at this meeting. Speaking at a post-meeting press conference, Yang said many board members believe domestic housing prices have not adjusted significantly and hope prices can meet the conditions for a “soft landing.”
Asked how much prices would need to fall, Yang said this depends on whether financial stability would be affected. “Would a 2% or 10% adjustment mark a soft landing, and 20% a hard landing? It's hard to say. Sometimes you have to look at the peak,” he said.
He added that because the market has been on an upward trend, the goal is a soft landing regardless of price levels, as long as financial stability is preserved. “If prices fell 20% without affecting financial stability, then we should be able to accept that 20%,” he explained.
While the Central Bank has not relaxed housing credit controls, it has given banks more flexibility in real estate lending. Starting next year, total real estate lending will revert to internal controls at each bank, though banks will still submit monthly data to the central bank.
Yang acknowledged that the “Preferential Housing Loans for the Youth” policy has imposed high costs on the Central Bank in managing housing market issues. Regarding a possible new youth housing program next year, he said the Cabinet is reviewing policy directions, and the Central Bank will implement corresponding measures.
