Is the housing market cooling? The Taiwan Housing Group and the Taiwan Economic Research and Development Center of National Central University released their latest “Taiwan Housing Market Sentiment Signal” and housing market sentiment forecast on the 9th. The prosperity index score for the third quarter (Q3) of 2024 is 48.32, and Q4 is 48.23. While this is a decrease from previous quarters, the indicators have shown a cooling trend. The forecast results also indicate that next year’s Q1 indicator scores will drop further to 46.71, returning from the yellow and red lights, which signify enthusiasm, to the green light that symbolizes stable business conditions. Zhou Heming, chief vice president of Taiwan Housing Group, pointed out that the subsequent economic boom may face a tug-of-war of “two excesses and two shorts”.
Housing market cooling? The latest signal is “two long and two short”, which means the green light will return to stability in Q1 next year.Real estate market diagram/provided by Taiwan Housing
Extended reading: Do you suffer from FOMO in the housing market?Think regarding the three questions before taking action
Recently, the government has once once more launched a crackdown on real estate speculation. Will the housing market boom cool down? Wu Daren, CEO of the Taiwan Economic Development Research Center at National Central University, said that Taiwan’s housing market climate indicator evaluates actual market momentum and prosperity based on 17 representative variables. The weight of each variable in each period is adjusted according to the increase or decrease in data. This indicator is “comprehensive” and “futuristic” and is the only leading indicator that can predict the development of the housing market in China. Among the variable values in this period, the building materials and construction stock price index, the amount of new mortgage loans taken by the five major banks, land tax increases, and other items have increased most significantly. Therefore, although the prosperity signal in the second half of the year is slightly lower than that in the first half, it is still bright. A yellow and red light symbolizes warmth.
Housing market cooling? In the second half of the year, Taiwan’s housing market sentiment signal was a warm yellow and red light, but the score dropped slowly quarter by quarter.Photo/provided by Taiwan Housing
“Two more” in the second half of the year: The ban on overseas funds is lifted, from stocks to real estate, industrial expansion dividends
Zhou Heming, chief vice president of the Taiwan Housing Group, pointed out that although the business indicators are still warm in the second half of the year, the index scores are slowly declining quarter by quarter, and the subsequent business may also face a tug-of-war of “two excesses and two shorts”. The first two major benefits can be attributed to “economic dividends”. As the Taiwan stock market continues to hit new highs, the asset layout of “stock-to-housing” is expected to continue. In addition, overseas funds repatriated following the US-China trade war will gradually expire in the second half of the year. The lifting of the ban is expected to be the next potential wave of funds in the housing market. Second is the “industrial dividend”. Led by AI and semiconductor-related industries, companies in various places are frequently expanding factories, and the construction of industrial parks is also in full swing. The development of the regional real estate market will be driven by employment and will be more promising.
Two shorts in the second half of the year: conservative price pursuit + policy interference
However, housing prices have increased sharply recently, and people are increasingly unable to cope with high prices. “Conservative pursuit of prices” will be a hidden worry regarding whether the buying momentum can be promoted; and the enthusiasm of the housing market has attracted official attention. Recently, from the central bank to the Ministry of Finance, new policies have been launched. After a wave of control measures, if the government continues to implement the new policy of suppressing real estate speculation, the magnitude of the economic fluctuation may be higher than expected, so we should pay close attention to “policy interference” in the future.
The Taiwan Housing Market Sentiment Signal was developed by the Taiwan Economic Development Research Center of National Central University, based on 17 representative variables affecting the housing market from January 2002 to the present, with reference to the processing methods of the indicators of the National Development Council’s Prosperity Countermeasures Signal. The original data are seasonally adjusted, long-term trends removed and standardized, and the prosperity indicators are calculated through principal component analysis, and the prosperity indicators and signals are predicted at a 95% confidence level. The corresponding signals for this score are respectively overheating (52.27~ 100) red light, warm (47.27~52.27) yellow and red light, stable (42.08~42.27) green light, slow (35.88~42.08) yellow and blue light, and sluggish (0~35.88) blue light.
⭐Hand knife joins! Yahoo Line financial management official account⭐
Housing Market Cooling in Taiwan: "Two Longs and Two Shorts" Signal a Shift
Q3 and Q4 2024 Housing Market Sentiment Signal: A Cooling Trend
The Taiwan Housing Group and the Taiwan Economic Research and Development Center of National Central University have released the latest "Taiwan Housing Market Sentiment Signal" and housing market sentiment forecast for the third and fourth quarters of 2024. The prosperity index scores for Q3 and Q4 are 48.32 and 48.23, respectively, indicating a cooling trend. While the indicators remain in the yellow and red light zone, signifying enthusiasm, the scores have been gradually decreasing. Forecasts indicate that the Q1 2025 scores will drop further to 46.71, transitioning back to the green light zone that represents stable business conditions.
"Two Longs and Two Shorts" in the Housing Market
Zhou Heming, chief vice president of the Taiwan Housing Group, has highlighted the "two longs and two shorts" that may shape the housing market in the coming months.
Two Longs:
- Economic Dividends: Continued stock market growth may lead to a "stock-to-housing" asset shift, while the lifting of restrictions on overseas funds repatriated following the US-China trade war is expected to inject liquidity into the housing market.
- Industrial Dividends: Growing AI and semiconductor industries are expanding factory operations, creating a demand for industrial parks and driving regional real estate development.
Two Shorts:
- Conservative Pursuit of Prices: Recent price hikes have made it challenging for buyers. This might dampen purchasing momentum, leading to slower growth.
- Policy Interference: Increasing housing market enthusiasm has prompted regulatory focus. The government’s recent policies aimed at curbing real estate speculation may significantly impact the market.
Understanding the Taiwan Housing Market Sentiment Signal
The Taiwan Housing Market Sentiment Signal, developed by the Taiwan Economic Development Research Center of National Central University, evaluates the housing market’s health based on 17 representative variables. These indicators track various factors affecting the market, including:
- Building materials and construction stock price index
- Amount of new mortgage loans taken by the five major banks
- Land tax increases
- Real estate transaction volume
- Interest rates
- Consumer confidence
- Economic growth
The signal uses a color-coded system to indicate market conditions:
| Signal | Score | Market Condition |
|---|---|---|
| Overheating | 52.27 – 100 | Red light |
| Warm | 47.27 – 52.27 | Yellow and red light |
| Stable | 42.08 – 42.27 | Green light |
| Slow | 35.88 – 42.08 | Yellow and blue light |
| Sluggish | 0 – 35.88 | Blue light |
Key Takeaways for the Housing Market
While the recent market sentiment signal points towards a cooling trend, the "two longs and two shorts" scenario highlights both potential opportunities and challenges. The upcoming months will be crucial in determining the trajectory of the housing market in Taiwan. Market participants should carefully analyze the economic, policy, and market factors to make informed decisions.
