To protect the country?Taiwan’s real estate market is healthy and has escaped the storm amid the global wave of bankruptcies among builders

Finance Center/Reported by Tang Shiqing and Yan Kai in Taipei

Signal, the Austrian real estate giant, declared bankruptcy, shocking Europe. In recent years, due to the surge in raw materials and rising interest rates, real estate prices in many countries have fallen, and the wave of bankruptcies among builders has continued to spread. For example, the top 10 builders in China have Nine companies have bounced or gone bankrupt one after another. However, experts describe Taiwan as being in the eye of a typhoon, with no wind or rain. The main reason is that the structural integrity of the real estate market, especially the central bank’s strict control of real estate lending risks, has allowed Taiwan to successfully escape the storm.

The construction of a 64-story skyscraper in Hamburg, Germany, was stalled. The trigger was the Austrian real estate giant Signer, which was unable to raise funds and had an estimated debt of NT$445.9 billion. It declared bankruptcy and became the biggest victim of the European real estate crash so far.

China’s three major private real estate companies have been hit by thunderstorms one after another, triggering a financial crisis. From Europe, the United Kingdom, Germany, and Sweden to Australia, China, and South Korea, the wave of bankruptcies among builders has spread like wildfire. However, Taiwan’s real estate market is calm as if it is in the eye of a typhoon.

Real estate expert He Shichang pointed out that European and American countries have significantly subsidized down payments for first-time homebuyers, while Taiwan’s subsidized interest rates are relatively low. If there is a major crisis in the housing market, all countries will step in to save the housing market. Recently, except South Korea, it has stepped in to save the housing market. Germany also spent 1.5 trillion to rescue builders, and China spent 4.4 trillion to rescue real estate. However, although Taiwan has escaped the storm, it still needs to be cautious and conservative, because if the policy is wrong, it may repeat the same mistakes.

He Shichang also said that after China’s loan restrictions were fully relaxed, Taiwan’s loan restrictions became the most stringent in the world. The central bank has strictly controlled real estate lending risks in the past few years, which has prevented Taiwan’s housing prices from skyrocketing or falling significantly. Although each has its own pros and cons. , but allowing the banking system to escape the real estate crisis generally makes good profits.

Before the epidemic, global quantitative easing of funds made the housing market in many countries bullish. However, with the end of the epidemic, rising interest rates, and skyrocketing construction costs, it has led to a global real estate collapse. In the past year, 4,280 builders in the UK have gone bankrupt. More than 5,000 companies in Sweden have defaulted, and 1,709 companies in Australia have filed for bankruptcy. Nine of China’s top 10 builders have bounced or gone bankrupt. On the other hand, Taiwanese builders have been able to escape the storm. Why?

Real estate expert Li Tongrong believes that since the 2019 epidemic, due to quantitative easing of funds around the world, advanced countries have been in a bullish trend for the past five years, which has also continued to affect the downward trend of the global economy, resulting in a shortage of real estate, especially in areas with over-priced prices, which are prone to thunderstorms, including Canada, South Korea, Australia, and China have experienced real estate bubble crises one after another. Looking at the past five years in Taiwan, the average increase in the six capital cities is about 60%, with an average annual increase of 12%. This is the smallest increase among the six previous cycles, but after deducting the increase in construction costs, consumer price index, and economic growth The original growth momentum of the rate is deducted, and the average house price increases by only 1.9% per year.

In Taiwan, there has been no significant overgrowth in this wave of housing market, with an average of less than 2% a year. After deducting the increase in construction costs, consumer price increases, and economic growth, the overgrowth is less than 2%, and less than 10% in 5 years. , relatively advanced countries, belong to the middle class, and Taiwan’s real estate developers have a sound financial structure. China is insolvent due to too much leverage and continues to collapse. However, the housing market has reached this point, and the bulls should be over. The death cross has already The first quarter of 2024 will be the beginning of this wave of real estate reversal.

Li Tongrong also added that the uncertainty surrounding the election next year will also be lifted, and the entire economy will be better than this year. The new government will have new incentives and is expected to propose major economic construction by the end of next year, so the probability of this wave of consolidation will also be higher. high. The house-banning policy has actually allowed construction companies to adjust their health. Experts estimate that the bullish market will end with a slight decline within two years. Even if new government incentives appear next year, the real estate market will undergo a downward correction in the first quarter of 2024.

Original source:Is the central bank trying to protect the country?Taiwan’s real estate market is healthy and has escaped the storm amid the global wave of bankruptcies among builders

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