Housing Market Cools Down: Is the 'Era of Large-Scale Urban Renewal' Over? Demolition Permits Hit 6-Year Low, Experts Identify Key Turning Point

The housing market has recently seen shrinking transaction volumes, and urban renewal activities are clearly slowing down. According to the latest statistics compiled by Jhong Shang Real Estate Agency from the Ministry of the Interior, a total of 1,846 residential demolition permits were issued across Taiwan in the first half of the year, a 17.8% decrease compared to the same period last year and the lowest level since 2021. Lai Chih-chang, Assistant Public Relations Manager at Da-Jia Housing's Planning and Research Department, analyzed that as the Urban Renewal and Reconstruction Act (commonly known as the 'Dangerous and Old Buildings Act') approaches its sunset date in May 2027, combined with a weak housing market outlook and soaring construction costs, developers' willingness to integrate urban renewal projects has declined, leading to a gradual cooling of the nationwide residential demolition and reconstruction boom. Statistics show that the peak for residential demolition permits over the past decade occurred in 2023, when 2,726 units were demolished in the first half alone. Although activity briefly rebounded in 2025, it has once again significantly cooled in the first half of this year. As of June, only 1,846 residential demolition permits were issued across Taiwan, down 400 units from 2,246 in the same period last year, representing a 17.8% decline. Compared to the 2023 peak, the drop reaches 32.3%. Lai pointed out that the sharp decline in demolition permits is driven by several factors: the impending expiration of the Dangerous and Old Buildings Act by the end of May 2027, which weakens incentive benefits; weakening market demand; persistently high construction costs; and tightening building financing conditions—all of which reduce landowners’ and developers’ willingness to pursue urban renewal or dangerous and old building redevelopment projects. Therefore, despite recent claims by local governments about the arrival of a 'large-scale urban renewal era,' current demolition volumes remain in a slump. Examining data from the six major cities, New Taipei, Taipei, and Taichung together accounted for 1,429 residential demolition permits in the first half, representing 77.4% of the national total, indicating that urban renewal momentum remains concentrated in northern and central metropolitan areas. Among them, New Taipei City issued 731 residential demolition permits in the first half, a 31.2% year-on-year increase, not only the highest for the same period since 2017 but also the first time surpassing Taipei City in the first half. In contrast, Taipei City issued 480 demolition permits, a 32.5% year-on-year decrease and the lowest for the same period since 2019. Lai noted that Taipei had long been a hub for urban renewal, with over 1,200 demolition permits issued in the first half of both 2022 and 2023, clearly leading other metropolitan areas. However, integration difficulties in Taipei’s prime areas have intensified, and most large-scale, developable sites have already been consolidated, causing demolition permit numbers to drop sharply over the past three years. On the other hand, New Taipei City’s government has actively promoted urban renewal in recent years, adopting a more proactive stance in project approvals. Additionally, the city has numerous aging residential clusters in its prime areas, increasing developers’ interest in reconstruction projects. Especially as integration efforts in Taipei have cooled in recent years, the urban renewal landscape has gradually shifted toward New Taipei City. Taichung sees 60% surge in demolition permits due to scarce land in core districts Looking at Taichung City, residential demolition permits reached 218 units in the first half, a 60.3% year-on-year increase—the highest growth rate among the six major cities. Lai Wan, Executive Assistant Manager at Jhong Shang Real Estate’s Central Division, believes Taichung already has a significant stock of aging buildings. Combined with increasing saturation in downtown development and extreme scarcity of land in core districts, urban renewal has become a key focus for developers. Rising demand has gradually elevated the region to a major urban renewal hub. Lai Chih-chang warned that the housing market is currently facing stagnation, along with cautious building financing and persistently high construction costs, making smaller-scale projects with insufficient integration conditions or lower development returns more likely to be delayed. He stated that although overall demolition permit numbers are declining, large-scale urban renewal projects in prime locations with complete site conditions, strong-brand developers, or high integration levels will continue progressing as planned. This indicates that the current reconstruction market has entered a phase of regional concentration and large-project dominance, rather than a complete halt in urban renewal. Lai believes that as the housing market potentially re-enters a bullish phase, construction cost increases stabilize, and with policy support from central or local governments, urban areas with urgent redevelopment needs still have the potential to reignite the urban renewal market.