Consumer Confidence Declines in Taiwan as Central Bank’s Credit Controls Impact Real Estate Market.

TAIPEI: Taiwan's consumer confidence has experienced a decline for the second consecutive month in November, attributed to selective credit controls implemented by the central bank, which have significantly affected the real estate market, as reported by National Central University (NCU) on Wednesday. According to Focus Taiwan, a survey conducted from November 18-21 by NCU revealed that the local consumer confidence index (CCI) decreased by 1.57 points from the previous month, reaching 75.49 in November, following a 0.78-point drop in October. The CCI measures public confidence in various economic aspects, including consumer prices, local economic conditions, stock market performance, likelihood of purchasing durable goods, employment outlook, and family financial situations for the upcoming six months. Dachrahn Wu, director of the NCU Economic Research Center, noted a significant decline in real estate-related indices in November, as the property market continued to feel the repercussions of the central ba nk's selective credit controls introduced in September. These measures, which include reducing the loan-to-value ratio on housing loans and increasing the reserve requirement ratio for lenders, aim to prevent a housing bubble and have led banks to tighten credit access for housing purchases. Wu pointed out that while the measures have a "limited" effect on home builders and multiple home owners, they could restrict access to loans for individuals with lower credit ratings. This situation requires close monitoring, especially for low-income potential home buyers, as market tightening could lead to public dissatisfaction if not managed properly. Among the six factors comprising the November CCI, the sub-index indicating the likelihood of purchasing durable goods, such as homes and cars, experienced the most significant drop, decreasing by 4.59 points to 103.1, its lowest level since February 2023. In NCU surveys, a CCI sub-index score between 0-100 indicates pessimism, while a score of 100-200 reflects optimi sm. In addition, the sub-index measuring the likelihood of purchasing stocks in the next six months fell by 4.41 points to 55.88, driven by uncertainties regarding U.S. President-elect Donald Trump's potential tariffs or policies that could disrupt markets, as mentioned by Wu. Among the remaining four sub-indexes, only the confidence regarding price expectations improved slightly, rising by 0.02 points to 41.79. The other three categories, which encompass sentiments about family finances, employment, and the local economic climate over the next six months, decreased by 0.16, 0.14, and 0.12 points, respectively, from the previous month, reaching 89.21, 78.04, and 84.91 in November, according to the survey findings. NCU's CCI survey in November involved 3,062 valid responses from Taiwanese consumers aged 20 or over. The survey had a confidence level of 95 percent and a margin of error of plus or minus 2.0 percentage points.