Central Bank Eases Second-Home Mortgages, Boosting Central-Southern Sales While Taipei Remains Constrained

The Central Bank of the Republic of China (Taiwan) adjusted the loan-to-value (LTV) ratio limits for natural persons purchasing their second home in September, easing the previously stricter restrictions. This move aims to enhance liquidity in the real estate market and mitigate the decline in home-buying demand caused by tightened lending conditions. Since the policy implementation, the willingness to view properties has increased significantly, with many potential buyers, who previously struggled to secure sufficient financing, beginning to consider entering the market.

According to statistics from two major real estate brokerage firms, October transaction volumes exhibited divergent trends compared to September. Some firms reported a slight decline in volume, with a drop of only 0.6%, while others indicated a 9% increase. This discrepancy reflects variations across different regions and transaction types, suggesting that the policy’s impact has not been uniform and that its long-term effects require further observation.

At the regional level, transaction volumes in Taipei City and New Taipei City have shown a gradual recovery, largely because high-priced areas continue to face the dual pressures of housing prices and LTV limits. In contrast, cities in central and southern Taiwan, including Taichung, Tainan, and Kaohsiung, have demonstrated more pronounced growth. Taichung City, in particular, saw transaction volumes increase by approximately 6% compared to September. These cities feature relatively lower housing prices, and the relaxation of LTV limits has made it easier for buyers and sellers to reach agreements.

However, a significant gap in price perception persists between buyers and sellers. Many buyers remain conservative regarding the pricing of newly listed properties, believing there is still room for price reductions. Conversely, sellers generally maintain current asking prices or make only minor adjustments to maximize their profits. This divergence in expectations has led to delays or cancellations in some transactions due to price negotiations, further contributing to fluctuations in transaction volumes.

From a macroeconomic perspective, the relaxation of LTV limits helps improve capital flow in the real estate market, thereby stimulating demand in related sectors such as construction, interior decoration, and consumer services. The banking sector must balance risk management with profitability, ensuring that loan quality is not compromised by the eased conditions. If the market continues to show a recovery in transaction volumes, it will inject a measure of vitality into the economy of the Republic of China (Taiwan). Conversely, if prices remain elevated or demand declines, the policy adjustments may need to be reconsidered.

Overall, while the easing of LTV limits has boosted the willingness to view properties, actual October transaction volumes remain segmented. Future adjustments to lending conditions, potentially combined with other stimulative measures, could help narrow the price gap between buyers and sellers and promote the stable development of the market. (Source: Central News Agency)