Rates, liquidity pushed 2021 home prices

DEMOGRAPHICS DELINK:
Price increases challenged beliefs that population is the most critical fundamental to gauge activity in the property market, an analyst said

• By Crystal Hsu / Staff reporter

Housing prices picked up nationwide last year, supported by an economic boom, excessive liquidity and low interest rates, but the population is shrinking, which is unfavorable for the property market in the long run, analysts said yesterday.

Taiwan’s population stood at 23,375,314 last year, contracting 1 percent, or 228,000, after mortality rates officially overtook birthrates in 2020.

The populations in the special municipalities of Taipei, New Taipei City, Taichung, Tainan and Kaohsiung declined by a combined total of 181,194, H&B Realty Co (住商不動產) said, citing Ministry of Interior data.

Photo: Hsu Yi-ping, Taipei Times

Taipei lost the most people at 118,484, followed by Kaohsiung (29,880), Tainan (18,157), New Taipei City (12,459) and Taichung (2,214), said H&B, the nation’s largest house broker by the number of franchises.

Taoyuan was the exception, with a 1 percent gain, or 21,437 people, it said.

However, the demographic changes did not hinder a rise in home prices, with increases of 18.5 percent in Tainan, 17.6 percent in Kaohsiung, 14.1 percent in Taichung, 7.7 percent in Taoyuan, 7 percent in Taipei and 5.4 percent in New Taipei City, H&B research head Jessica Hsu (徐佳馨) said.

“The price hikes last year challenge conventional beliefs that population is the most critical fundamental to gauge the property market and that population losses for any reasons bode ill for housing prices,” Hsu said in a report.

One explanation could be that Taiwan’s low fertility rate boosted the number of small households and supported real demand, Hsu said.

Despite the population decline, the number of households increased 1.9 percent to 9,006,580, she said.

The rise in the proportion of small families might also explain why two-bedroom apartments have become mainstream products, she said.

International reports show that people assign more importance to health and well-being amid the COVID-19 pandemic and are willing to live in less populous areas to avoid crowds, she said, adding that remote working has made migrating to suburban locations more feasible.

Global monetary easing has encouraged property purchases as a hedge against inflation, Hsu said.

Mandy Lang (郎美囡), lead researcher at Great Home Realty Co (大家房屋), said that an improving outlook for the job market in southern Taiwan has bolstered housing prices in Tainan and Kaohsiung.

Taiwan Semiconductor Manufacturing Co (台積電) facilities that are being built in the two cities have prompted developers to construct new residential complexes in the hope of selling them to TSMC employees, Lang said.

Cushman & Wakefield Taiwan managing director Billy Yen (顏炳立) said that housing prices in southern Taiwan have soared 30 percent following TSMC’s capacity expansion announcements.