Taiwan property in decline

Overall confidence in the performance of the property market in Taiwan is at an all time low. In fact, according to a recent survey, confidence in the last three months of 2007 was at its lowest level in five years.

Consumer confidence in Taiwan's housing market has reached a five year low. The fourth quarter of 2007 has many expecting housing prices to fall. An IPPI (Physical Planning and Information) survey has revealed that a comparison between the third and fourth quarter confidence index fell from 88 to 83. The survey, which began in 2002, has been accurate in gauging consumer confidence and how the housing market will react based upon the figures.

Both the ruling and opposition parties of Taiwan have made efforts to boost exchanges between Taiwan and mainland China with little success. The increased cooperation did not do anything to raise public confidence. Interestingly, the confidence index shows that the majority of the public believes that housing prices in the future will rise. According to the confidence index, the distant future had a confidence index of 87 while the near future has a very low 78. According to the survey as many as 63% of the people listed as actively seeking a home were expecting housing prices to drop. The third quarter of 2007 only had around 45% of home buyers expressing this fear.

Large investors still see Taiwan as a viable property market, just not in the short term. Homes are being sold, and the majority of buyers are those considered "rich" by class standards. According to estimates, the average home buyer is expected to spend around 36% of their yearly earnings on mortgage. Previously this figure was higher at almost 44%. This does not mean that home buyers are making more as a whole, but that those that are buying homes have more available income.

As property prices continue to fall, banks are expected to cut interest rates. Lower interest rates will eventually help drive demand.

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