Favourable regulatory changes, low mortgage rates and stable economy will help the market keep its growth momentum Taipei's housing market is expected to keep its upward trend next year due to favourable changes in regulations, sustainable low mortgage rates and a stable economy, according to property analysts. Despite the political uncertainties, an anticipated increase in demand and a limited supply point to healthy growth in the market, they said. 'Home prices grew 10 to 20 per cent since the beginning of the year,' said Wendy Hsueh, a director of DTZ Debenham Tie Leung (Taipei). Primary market housing prices in Taipei grew 4 per cent quarter on quarter and 11.6 per cent year on year to about US$40,690 per square metre, according to Australian-based Macquarie Research. Primary house prices in southern Taiwan, although not as buoyant as in Taipei, rose 5.21 per cent quarter on quarter but remained flat compared with the same period a year ago. Property agents said housing prices would rise 5 per cent next year. 'The political uncertainties did not have a negative impact on the market. On the other hand, some investors and end-users are betting on a better economic and political outlook after elections in 2008, and therefore, they are entering the market and boosting demand,' Ms Hsueh said. The strong demand was also helped by the low mortgage rates, she said. The average mortgage rate of Taiwan's five leading banks fell to 2.26 per cent in September from 2.27 per cent in August. New mortgage loans at the five banks grew 12 per cent quarter on quarter and 69 per cent year on year in the third quarter of the year. 'We expect the mortgage rate will remain at this low level over the next three years as competition among the banks is unlikely to abate,' Macquarie analyst Corinne Jian said. Regulatory changes in the past few months are expected to lift local and foreign demand and that will have a positive impact on the market, Ms Jian said in a research report. The changes include allowing banks to lend to foreigners without residential permits and providing detailed rules to facilitate the execution of urban renewal projects and shorten application times. 'We believe this deregulation is positive for the Taiwan property market,' she said. Ms Hsueh said she does not expect home prices will fall given the stable economy. Foreign trade is still expanding. According to the Directorate-General of Budget, Accounting and Statistics, exports in the first eight months of this year grew 14.5 per cent from the corresponding period last year, while total import values increased 11.5 per cent over the same period. Gross domestic product growth was 0.83 per cent in the second quarter while the unemployment rate fell 0.27 percentage point in the first eight months. Because of the anticipated rise in housing prices, Macquarie increased its estimate of Taipei's affordability ratio this year to 50 per cent from 47 per cent. That means that people in Taipei need to use 50 per cent of their annual disposable income for mortgage payments on average when buying a new flat.
