TAIPEI (Taiwan News) — US President Trump’s reciprocal tariffs sent the Taiwan stock market plummeting, with real estate agents noting that a decline in investor confidence and the Central Bank's tight credit controls led market sentiment to hit rock bottom in the first quarter of the year.
Real estate experts now predict the number of real estate transactions over the full year is likely to fall below 300,000 units, a new low since the COVID-19 outbreak in 2019, per CNA.
Hsu Chia-Hsin (徐佳馨), executive director of H&B Housing's research office, said Trump's tariff war and crashing stock markets have exacerbated disruptions brought about by the Central Bank’s seventh round of credit controls introduced in September. Furthermore, developers are likely to postpone construction projects to reduce financial risk, further signaling a change in market sentiment.
Hsu believes the real estate market sentiment will remain pessimistic throughout the year, potentially affecting Taiwan’s economic performance. Although increased tariffs may trigger inflation, stagflation before an economic recession is more likely to occur.
In this type of economic environment, investors may prefer to keep their assets liquid and avoid real estate investments, given the difficulty of conversion. Hsu added that it may take more time to understand the consequences of Trump’s tariffs.
Taiwan Realty Vice President Jack Chou (周鶴鳴) said that whenever there was global financial turmoil, the US turned to quantitative easing to rescue the economy, including during COVID-19. In other words, the US Federal Reserve actively printed money to bolster the economy, and the Central Bank of Taiwan followed suit by cutting interest rates.
After the China-US trade war in 2018, Taiwan experienced a dramatic capital inflow, which contributed to a rise in housing prices. During the SARS epidemic in 2002–2004, the government halved the land value-added tax to stimulate real estate transactions, causing the stock market to correct and then rebound, leading to a redistribution of assets.
However, Chou believes the current economic crisis brought about by tariffs is different, with both the impact level and consolidation period lasting longer. Trump’s tariff policy should not be considered a single event but part of a larger pattern that affects the global supply chain and industrial transfer.
The current focus among real estate analysts is whether or not the Central Bank of Taiwan will ease interest rates.
Lai Chih-chang (賴志昶), public relations director at Great Home Realty, says some analysts believe a steep stock market drop will indirectly impact the housing market, with housing prices following suit as they hope to purchase real estate more cheaply. However, real estate has a slow cash conversion rate and poor liquidity and often reacts slowly to market conditions.
Lai said that despite the popular expression that many "sell houses to save their stocks," in reality, this situation is unlikely to occur due to time-intensive processes such as the transfer of ownership. However, those looking for real estate not as an investment but for self-use may use this dip in real estate values to purchase a home.
