Fri, Dec 31, 2004 - Page 11 News List

Real-estate growth expected to persist

RECOVERY The index of leading property indicators held steady for the fifth consecutive quarter, although the declining birth rate could affect construction firms

By Jackie Lin  /  STAFF REPORTER

Riding on the back of this year's strong recovery after a decade-long slump, the nation's real-estate market is expected to maintain its growth momentum next year, albeit at a slower pace, according to a report on the market's third-quarter performance released yesterday.

"We expect the property market to follow a stable upward trend next year, and housing prices should not decrease unless there is excess supply," Chang Chin-oh (張金鶚), professor of land economics at National Chengchi University, told a press conference.

The report, prepared by the Architecture and Building Research Institute under the Ministry of the Interior, showed that the index of leading property indicators for the third quarter increased by 0.76 percent from the April-to-June period to 105.65 points.

Out of the five components making up the index of leading property indicators, only GDP and the consumer price index rose, while the construction stock index dropped. Money supply and property mortgages remained steady.

The total score of these indicators held steady at 13 points, flashing a "green" indicator for the fifth consecutive quarter to indicate continued steady growth, according to the institute.

A five-level spectrum is used to gauge the real-estate sector, with "blue" indicating recession, "yellow-blue" a slowdown, "yellow-red" a slight overheating, and "red," absolute overheating.

Despite an optimistic outlook, construction developers polled last month tended to adopt a conservative attitude in view of rising interest rates and increased market supply, Chang said.

About 67.3 percent of polled companies expected the market to remain unchanged or improve in the first quarter of next year, but 32.7 percent expressed pessimism.

Compared with their counterparts in Taipei and Taichung, companies in Kaohsiung appeared to be worried about the market's prospects, with 44.4 percent expecting a slowdown.

"On the contrary, I believe there is still a potential market in southern Taiwan, because the MRT construction project will drive up market demand," Chang said.

While housing prices remain stable, Chang suggested that home buyers take the opportunity to invest, although they should make sure of the quality of their purchase.

Quoting reports released by the Council for Economic Planning and Development, the institute's director-general Hsiao Chiang-pi (蕭江碧) said trading in second-hand houses has been on the rise over the past few months, creating a massive market for the home-improvement businesses, worth NT$200 billion per year.

"This market segment must not be neglected, as this will be the future trend," Hsiao said.

Looking ahead, the nation's low birth rate -- described by Hsiao as a national crisis -- has cast a shadow on the property sector.

"I think construction companies will feel the impact very soon," he said.

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