Taiwan Dollar: Monetary tightening and housing recovery – DBS

DBS economist Ma Tieying expects the Central Bank of the Republic of China to raise its policy discount rate by 12.5bp to 2.125% in December as CPI stays above 2% and electricity price risks build. Financial conditions are already tighter, while gradual easing of housing credit controls is seen supporting a modest recovery in Taiwan’s housing market into 2027.

Central bank path and property

"We continue to expect a modest 12.5bp rate hike at the December meeting, bringing the policy rate to 2.125%. By then, CPI inflation is likely to have remained above 2% for around six consecutive months. The possibility of an increase in electricity prices following the November local elections could further lift inflation expectations, strengthening the case for a December rate hike."

"The central bank has continued to ease housing credit controls gradually. At its September meeting, it raised the LTV cap on second-home mortgage loans to 70%, the second easing of housing credit controls this year."

"A gradual and modest recovery in the housing market is expected from 4Q26 into 2027. The existing-home market has already shown early signs of recovery, with Sinyi housing prices returning to slightly positive yoy growth since 2Q. Total building transactions also returned to positive yoy growth in 3Q."

"The new-home market remains under pressure. The number of new units under construction has started to decline since 2023, while new completions are only beginning to ease this year. Demand remains weak, as potential buyers continue to wait for lower prices."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)