The central bank once again maintains selective credit controls, with real estate experts warning that 2026 will enter a phase of price stagnation and capital dislocation.
(Background: Ray Dalio of Bridgewater Fund: Bitcoin is not as good as gold; central bank reserves won’t choose it)
(Additional context: Full text of the Bank of Japan’s statement: interest rate hike of 25 basis points, with consideration for further adjustments)

Table of Contents

• Temporary easing? Actually an upgrade in regulation?
• 2026 Scenario: Capital starvation and price stagnation
• Real estate industry fears that if controls continue next year, capital dislocation could lead to a flood of blood.

On December 18, Taiwan’s central bank held its latest board meeting, which did not deliver the “Christmas gift” that the market was hoping for, but instead fully retained the seventh wave of selective credit controls.

Central Bank Governor Yang Jinlong emphasized that Taiwan’s housing market has not yet soft-landing, noting that both bank loans and housing prices have not shown sufficient cooling.

Industry analysts generally analyze the conditions for easing by the central bank:

There are two main conditions for easing: one is a reduction in loan concentration, and the second is a perceptible decline in housing prices.

Temporary easing? Actually an upgrade in regulation?

On the surface, the central bank announced that starting in 2026, the “total amount of real estate loans” will return to internal control by banks, but simultaneously reduced the reporting frequency from quarterly to monthly, and retained the authority to activate special project inspections at any time.

In mid-August last year, the central bank used “moral suasion” to ask banks to self-manage the total amount of real estate loans for the upcoming year (from Q4 last year to Q4 this year), and in September, it adjusted the selective credit controls for the seventh time. After the measures went online, loan-to-value ratios were lowered, and the public’s optimistic expectations about housing prices cooled down, transaction volume weakened, and price growth slowed. The concentration of real estate loans as a share of total loans (concentration) dropped from a high of 37.61% at the end of June last year to 36.7% at the end of November this year. During the same period, the annual growth rates of total real estate loans, residential purchase loans, and construction loans also declined, reaching 3.79%, 4.81%, and 0.68% respectively by the end of November.

The central bank stated that, based on the fact that banks have largely implemented self-management of total volume and indicators have improved over the past year, starting next year, the total amount of real estate loans will revert to internal control mechanisms of each bank. Banks still need to report data to the central bank monthly, and the central bank will continue with “special project inspections” to monitor the current situation and enforce selective credit controls. The overall goal is to direct credit resources toward policy priorities: non-self-use home purchases, urban renewal and old building reconstruction, social housing, and supporting real investment funds for productive enterprises.

Yang Jinlong said this provides banks with flexibility, but the market reads another layer of message: the brake pedal remains firmly on the floor, ready to be pressed again at any time.

The concentration of bank real estate loans decreased from 37.61% in June 2024 to 36.7% in November this year, but still remains at a high level historically. Yang Jinlong compared the housing market to an elephant, moving slowly.

Market data also confirms the lag; the latest housing market indicators show that the average weekly visitors to new developments in northern Taiwan are only 12.9 groups, with fewer than 1 transaction, liquidity approaching freezing point, but sellers’ asking prices remain almost unchanged, showing a rigid price structure.

2026 Scenario: Capital starvation and price stagnation

Real estate industry fears that if controls continue next year, capital dislocation could lead to a flood of blood.

The central bank’s real concern is the overdue loan ratio. Once this indicator rises, even if housing prices only fall by 10%, it will meet the “perceptible decline” standard, and the policy door will open.

Xu Jiaxin, Executive Director of the Commercial and Residential Real Estate Planning Research Office, warned on the Ettoday Real Estate Cloud program to be cautious of “overheated areas and strange products” in 2026, as the former faces correction pressure, and the latter faces difficulty in resale.

She estimates that transaction volume will at least not be worse than 2025 due to the housing handover wave supporting the market, but prices may have room for downward adjustment. Her implication is that the “egg white zone” will struggle, while the “egg yolk zone” will hold up. Brand developers may still achieve new highs, but the overall market trend is “price stagnation and decline.” Regarding the new Qing An 2.0, her forecast is:

“When the new Qing An was launched, housing prices did not fall but rose, so the central bank’s controls related to it are expected to maintain a quota of 10 million yuan, but expansion will be difficult; a five-year grace period may be reviewed to prevent encouraging investment; interest rates are likely to remain unchanged.”