Fri, Jun 04, 2004 - Page 10 News List

Real estate set to take off, analysts say

PROSPERITY Although soaring construction material prices and political tension dragged property prices down, industry watchers are upbeat for the short term

By Jessie Ho  /  STAFF REPORTER

The real estate market is set to take off as political uncertainties start to clear after the presidential inauguration on May 20, market watchers said yesterday.

"It is estimated that some NT$100 billion worth of new properties will be released in the third quarter, a 30 percent rise from the same quarter last year," Lai Cheng-i (賴正鎰), chairman of the Taiwan Construction Development Federation (台灣省建築開發公會), told a press conference yesterday.

Following in the footsteps of the economic upturn in the last quarter of last year, the property market, which had been dragged down by soaring construction material prices, is starting to recover.

The value of pre-sale real estate has grown to NT$97.8 billion in the first quarter of this year, Lai said.

Although industry watchers predicted a pre-sale real estate value of NT$100 billion in the second quarter, the actual figure was NT$74.4 billion due to the post-election turbulence, he said.

"The prices of properties in Taiwan will rise by 5 percent to 10 percent annually from now on. This prosperity could persist through the next seven years," Lai said.

He said that some factors could still put the brakes on the recovery, including rising oil prices and growing cross-strait tensions, which might lead to hesitance among buyers and investors.

Evertrust Rehouse Co (永慶房屋), a major real estate agency, also has an optimistic outlook for the second half of the year.

It said the overall transaction volume in the house sector increased by 3 percent last month compared with the same period last year. Most of the transactions were in Taipei City, with a 50 percent growth rate over May last year.

The value of real estate in the center and south of the country has enjoyed a higher growth rate than in the north, ranging from 3 percent to 5 percent, because it was undervalued prior to the election, according to the agency.

"We expect more transactions in the next six months, as the NT$300 billion in low-interest loans offered to first-time home buyers, which was announced by the Cabinet last Sunday, gave a further push to the market," said Chen Chih-hui (陳芝慧), a public relations official at Evertrust Rehouse.

Chen said the number of visitors to Evertrust Rehouse's online house showcase increased by 15 percent after the loan project was announced.

The decrease of 50 percent in the land value incremental tax rate, due next January, could also encourage property purchases, Chen said.

The tax, which is levied on the sale of all land, is based on the increase in the government-assessed value of the land, adjusted for inflation as measured by the consumer price index. Reducing the land-value tax allows people to sell properties at a lower cost and gives buyers more bargaining power.

In contrast to Lai's optimism for the next seven years, Chen said the company will closely watch developments in cross-strait relations, which he described as a landmine that could explode at any time to undermine the market.

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