Taiwan home buying sentiment weakening over inflation pressure, geopolitical concerns, Cathay Financial survey finds

Cathay Financial Holding Co. (2882-TW) released its April survey on national economic confidence on Wednesday (April 20), highlighting the impact of soaring geopolitical risks and credit tightening by major central banks. 

In particular, the survey shows that central bank interest rate hikes have led to a lower outlook and optimism in the stock market, with people’s willingness to buy homes at a near three-year low. In contrast, soaring costs have led to a decade-high inflation concern. 

Geopolitical risks and the accelerated credit tightening by major central banks have weakened the outlook. According to the survey, the recrudesce of the pandemic has also dampened consumer sentiment. 

The Outlook Index fell to -16 from -0.2 in March, while the Current Conditions Index fell to -16.5, down from -1.7 in March. 

Consumer Expectations toward inflation also slipped to 7.1, slightly lower than March’s 8.4, while their intentions toward significant spending fell to zero from 10.8 in March as the local epidemic heated up. 

In the housing transaction survey, Cathay Financial said the Home-Buying Intention Index dropped to -52.1, much lower than March’s -46 and a new low since May 2019, as the recent central bank interest rate hike affected people’s willingness to buy homes. 

Cathay Financial also reflected on the Directorate General of Budget, Accounting and Statistics’ estimate that the economy will grow by 4.42% in 2022. This month’s survey results show that the average public expectation of Taiwan’s economic growth rate in 2022 is 3.30%. 

The survey further shows that the average public expectation of Taiwan’s economic growth rate in 2022 is 3.30%, lower than the 3.36% in March. Still, 81% of the public believes that the economic growth rate will reach more than 2% in 2022. 

The average public expectation of inflation in 2022 is 2.36%, higher than the 2.23% in March. Public sentiment on price inflation remained at 93.3, the highest since June 2012. 

For Taiwan stocks, Cathay Financial pointed out that geopolitical risks still exist. The accelerated monetary policy tightening of the world’s major central banks could also result in global stock market shocks. 

This month’s survey results show that people’s optimism about the stock market fell to 2.9 from 8.1 in March, while the Risk Appetite Index dropped to 12.0, down from 15.0 in March.