Buying sentiment in Taiwan’s real estate market cools down, Q3 housing price growth converges

On the 4th, National Chengchi University and Yongqing Real Estate Group unveiled their latest Real-Time Housing Price Index for the third quarter. The findings indicate that housing price indices across the nation and in the six major metropolitan areas, including Hsinchu, are showing seasonal growth, albeit at a decelerating rate. Notably, Tainan City, which saw the most significant increase, reported a drop of 4.2 percentage points in its growth rate.

In an interview, Kuo Han, the Director of the Research and Development Center at Yongqing Real Estate Group, shed light on the factors behind the surge in housing demand during the first half of the year. He attributed this spike to Taiwan’s economic recovery, a continuous rise in the stock market generating a wealth effect, and housing loan policies that were favorable to first-time buyers. This combination led to robust purchasing activity and a thriving real estate market. However, by August, several banks hit their mortgage lending limits, which tightened access to real estate financing. As a result, transaction times for existing homes lengthened.

Kuo observed that as banks restricted their mortgage offerings, potential buyers grew wary of their chances of securing loans. This change prompted a more cautious approach to purchasing, quickly cooling demand and alleviating the upward pressure on housing prices. This shift contributed to the decline in the quarterly growth rate for Q3.

According to the latest Real-Time Housing Price Index data, nationwide seasonal growth in housing prices fell from 4.7% in the previous quarter to 3.1%. This trend suggests that as the government tightens bank lending, market demand is starting to stagnate, reflected in the diminishing price increases.

Regionally, among the six metropolitan areas along with Hsinchu, Taichung City continues to experience a rise in housing prices, with a seasonal growth rate climbing to 3.7%. In contrast, other regions saw declines, particularly Tainan City and New Taipei City, which recorded significant reductions of 4.2 and 4 percentage points, respectively. Overall, Taipei City and Tainan City posted quarterly growth rates below 2%, while New Taipei City and Taichung reported rates between 2% and 3%. Taoyuan City, Hsinchu, and Kaohsiung, however, reported seasonal increases exceeding 4%.

Specific figures for Taichung City reveal that prices for pre-sale homes have significantly dropped following government measures aimed at cooling the housing market. The average price fell from NT$528,000 per ping in June to NT$485,000 by August 20, marking a decrease of NT$43,000 or roughly 8.1% within just two months.

Kuo concluded by highlighting that Tainan City has seen sharp increases in its housing price index in recent years, largely due to its initially lower prices. As those prices rise, the relative increase becomes much more pronounced.