Sat, Jul 30, 2005 - Page 10 News List

Economy likely to drag down real estate: pundits

DOWNTURN Real-estate indicators are showing signs that the housing market will slow down in tandem with the economy and a lower annual GDP, professionals said

By Jackie Lin  /  STAFF REPORTER

The nation's real-estate market is likely to experience a slight downturn year-on-year in the second half of the year, as economic growth is forecast to fall short of 4 percent for the year, professionals said yesterday.

The housing market in the following months will inevitably be affected by a slowing economy, said Chang Chin-oh (張金鶚), professor of land economics at National Chengchi University. The government has forecast this year's GDP to rise 3.63 percent compared with 5.71 percent growth last year.

Chang made the remarks at a press conference where he issued a real-estate indicator report sponsored by Cathay Real Estate Development Co (國泰建設).

"Prices will show only marginal fluctuations as the market is consolidating and buyers will have more bargaining power in price negotiations. But the volume is expected to decline," he said.

He also squashed market rumors that China's revaluation of the yuan will direct hot money into Taiwan and heat up the local real-estate sector, which is showing signs of a slow recovery.

"I think this idea is too optimistic as profiting from properties will require long-term investment and the market is not suitable for `fast-in, fast-out' business," he said.

Even if hot money does pour into the market, he said he doubts that much of it will be injected into the real-estate sector.

According to this report, the nation's second-quarter new-housing-unit market continued to go through consolidation, with transaction prices and volume stabilizing.

Nationwide, 22,397 new housing units totaling NT$177 billion (US$5.54 billion) were supplied to the market in the second quarter, down by 7.8 percent and 15.7 percent respectively from the previous quarter.

"We suggest that construction firms adopt a more conservative strategy in pricing and churning out new projects, which might help them achieve better sales in the stabilizing market," he said.

Chang Chin-kuei (張清櫆), president of Cathay Real Estate, echoed his view.

"The locations targeted by construction companies should be able to resist price dropping," he said, adding that Cathay Real Estate will place more focus in the northern areas, where price increases are showing strong momentum.

The Taichung market, however, recorded unstable development as its average housing price slightly decreased and the range for price negotiations was widening.

Chang Chin-oh attributed this to the fact that market demand has been overvalued, especially as the Taichung-based Central Taiwan Science Park (中部科學園區) hasn't been creating as much market potential as was expected.

In the office-leasing market, the average rental recorded in Taipei City and county decreased slightly, while the vacancy rate in the capital's Grade A office space rose from 9.9 percent in the first quarter to 11 percent in the April-to-June period, the report said.

"This is because some new supplies, especially the vacancy rate in the Taipei 101 skyscraper, affected the entire Grade A leasing market," the report said.

Rentals for Taipei City's prime office space averaged NT$2,127 per ping, down 1.04 percent from the first quarter.

The Xinyi district topped the list in the capital with NT$2,505 per ping, followed by NT$2,364 per ping in Dunhua North and Minsheng East roads, according to the report.

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