Is the housing bubble about to burst?
Taiwan's real estate market has experienced waves of growth in the past few years. Senior investors and house hoarders have made a lot of money, but for young people, it has become increasingly difficult to own their own house. difficulty.
Experts point out that the housing market has been in an "overheated" state in the past few years. Coupled with the pressure of inflation and rising raw material prices, housing prices have been thrown up like a balloon and have exceeded the range that ordinary people can afford.
In response to this situation, on September 19, Taiwan’s central bank launched its seventh wave of housing market suppression policies at its third-quarter Board of Governors meeting, aiming to combat excessive speculation and housing hoarding. The content of the policy was called “the most severe in history.” "Strict" immediately caused a cry of mourning in the industry.
The central bank's seventh wave of housing crackdown measures "drugs"
Specifically, the central bank will once again increase the deposit reserve ratio by 1%, which means that banks will need to retain more funds as risk reserves, further tightening the flow of funds in the market. In addition, the conditions for home purchase loans for individuals and legal entities have also been significantly adjusted.
Some of the policies that have received the most attention include:
First household purchase loan: If a natural person already owns a house in his name, the first household purchase loan will no longer have a grace period and will be required to start repaying the principal directly.
Second home purchase loan: The loan percentage has been reduced from the original 60% to 50%, and the scope of application has been expanded to all parts of the country, further reducing the home purchase ability of multi-home holders.
Loans for the third household (inclusive) and above and high-priced residences: the loan percentage is reduced from 40% to 30%, and investors are strictly restricted from purchasing high-priced residences and investing in multiple houses.
Builder's remaining house loan: The percentage is reduced from 40% to 30%, which reduces the liquidity of unsold houses accumulated by builders.
The "New Qing'an" policy has become the driving force behind rising housing prices
It is worth mentioning that the "New Qing'an Home Loan" policy launched by the government at the end of last year was originally intended to help young people buy their first property, but it unexpectedly became a booster for the soaring housing market.
According to data released by the Ministry of the Interior, in the first quarter of 2024, the housing price index across Taiwan rose across the board. The housing price index in the six capital cities and the whole country hit new highs, with a single-quarter growth of 3.39%. This marked the 23rd consecutive quarter of housing price growth in Taiwan, and together with the housing price income The ratio and loan burden ratio have both reached historical highs.
What is the future trend of the housing market?
Experts said that although the central bank's regulatory measures this time seem to be strong, the bubble in the housing market has been inflating for many years. Under such circumstances, the government still forcefully promotes Xinqing'an, which is likely to be the straw that breaks the camel's back: "If Without more specific supporting measures, credit control alone may not be able to avert a possible collapse crisis in the future. The government should have intervened in the early stages of the overheating of the housing market.”
As the saying goes, "things must go to extremes in reverse." Experts point out that it is difficult to say whether the central bank's housing crackdown strategy will be effective. However, bubbles in the housing market often burst when they are most prosperous. Investors and home buyers should remain cautious. Avoid being swayed by emotions when the market overheats and ultimately falling victim to a bursting bubble.
