Taipei home prices may fall as much as 5 percent in the short term if the pro-independence opposition wins in the city’s mayoral elections, according to Grand Cathay Securities Corp.
The Democratic Progressive Party is leading the ruling Kuomintang, or Nationalist Party, which has dropped a pro- independence stance and built trade relations with the mainland, ahead of the municipal elections in Taiwan’s capital on Nov. 27.
Taipei home prices are at the highest since 1991, supported by record-low interest rates and Taiwan President Ma Ying-jeou push to make economic relations with the mainland the priority of his administration since he came to power in May 2008.
“There’s speculation in the market that there’s bound to be a correction in prices if the Democratic Progressive Party is in power, so sentiment is affected,” said Eric Zhang, an analyst at Grand Cathay, a company that acts as a broker, dealer and underwriter for financial securities.
Taiwan and China signed a historic trade agreement in June that cut tariffs on more over 500 Taiwanese goods. The DPP, which was in power in Taiwan from 2000 to 2008, says the deal will allow more Chinese imports into the island and cost jobs. The party on Dec. 20 rallied about 100,000 people for a street march to protest the administration’s policies toward China and the trade agreement.
Housing prices in Taipei averaged NT$219,000 per ping ($195 per square foot) in 2000 when the DPP got into power and fell for the next two years, according to Sinyi Realty Co., Taiwan’s biggest real-estate brokerage. Prices in Taipei were NT$489,000 per ping in the second quarter this year. One ping is equivalent to 35.57 square feet (3.3 square meters).
Taipei home prices have risen 7.5 percent in the second quarter from a year earlier to the highest since 1991, according to Sinyi. Residential prices may gain 5 percent this year, according to Citigroup Inc.
The central bank cut key interest rates seven times between September 2008 and February 2009 to a record low to weather the global financial crisis. It raised the rate 12.5 basis points in June to 1.375 percent.
China regards Taiwan as part of its territory and has threatened to invade if the island declares formal independence. The two sides have been ruled separately since Chiang Kai-shek’s Kuomintang fled to the island after being defeated by Mao Zedong’s Communists in 1949.
To contact the reporter on this story: Weiyi Lim in Taipei at Wlim26@bloomberg.net
To contact the editor responsible for this story: Andreea Papuc at email@example.com