Real-estate investors should remain cautious as the nation's property market is likely to slow down because of an oversupply of new housing units, as well as an expected economic downswing in the second half of the year, market watchers said yesterday.
"We suggest that developers be rational [in churning out construction projects], so that the housing market can return to normal soon," said Chang Chin-oh (張金鶚), professor of land economics at National Chengchi University. He was speaking at a press conference yesterday while releasing the latest housing report he co-authored with the Architecture and Building Research Institute under the Ministry of the Interior.
According to the report, the total score of various indicators used to gauge the real-estate sector remained flat at 12 points for the January-to-March period, flashing a green light for the seventh consecutive quarter to indicate continued mild growth.
A five-level spectrum is used in the report, with "blue" indicating recession, "yellow-blue" a slowdown, "yellow-red" a slightly overheating market and "red," absolute overheating.
However, the index of leading property indicators, which forecasts the prospects three quarters from now, slightly slid by 0.42 percent from the fourth quarter last year to 105.5 points last quarter.
"This is the index's first downturn after it advanced for six straight quarters. Whether it really heralds a long-term downward trend in the property sector remains to be seen, but this warning sign must not be ignored," he said.
As demand has been weaker in the face of the supply glut, 37.27 percent of the developers, property agents and banking institutions polled in the survey expressed pessimism for the third quarter of the year, while only 13.64 percent said the market will improve.
Although the housing market's rebound has slowed down, Chang said public confidence should be strengthened by such favorable factors like the government's decision to continue granting low-interest housing loans, permanent cuts in incremental land-value taxes, stable housing prices and interest rates hovering at the lower end of the scale.
However, Taiwan is not expected to experience a property-price bubble, as suggested in a recent article published by the UK business magazine the Economist, which concluded that the global real-estate bubble will soon burst.
"Taiwan's property market has gradually recovered in a stable manner over the past two years. As there is no rapid pick-up, we believe the market will not go as far as to crash, as feared in other countries," the institute's director-general Hsiao Chiang-pi (蕭江碧) said.
But construction firms should be circumspect when presenting new housing units in a bid to avoid widening the gap of supply and demand.
"Products of high quality and in good locations are two important factors," Chang said.
Homebuyers should do more research to locate ideal targets, instead of sitting and waiting for housing prices to drop, he said.