The outlook for the real estate market could be less rosy as weakening macro-economic conditions and possible inflationary pressure could dent people's purchasing power and demand, analysts said yesterday.
"Skyrocketing raw materials prices are likely to impact the macro-economy, which could in turn hit the property market," Chang Chin-oh (張金鶚), professor of land economics at National Chengchi University, told a press conference.
The threat of inflation driven by soaring raw materials prices is expected to slash consumers' purchasing power and weaken demand, Chang said.
He appeared conservative about the prospects of the property sector, citing a survey conducted in the fourth quarter of last year that showed developers were turning bearish.
Chang made the remarks just one day after the Taipei-based Taiwan Institute of Economic Research (TIER, 台經院) revised its economic growth forecast for this year to 3.91 percent from the 4.02 percent predicted in January, due to slowing private consumption and domestic investment. Minister of Economic Affairs Morgan Hwang (黃營杉) also announced that the Taiwan Power Co (台電) would raise its electricity rates next month amid surging oil prices.
In the first quarter of this year, the real estate market saw fewer new projects launched because of oversupply, which in turn brought up housing prices marginally, according to a survey released by Cathay Real Estate Development Co Ltd (國泰建設) and the National Chengchi University's Taiwan Real Estate Research Center.
The amount of new housing nationwide plunged by 41.13 percent quarter-on-quarter to a total of NT$146.9 billion (US$4.60 billion) during the first quarter, while prices edged up slightly by 1.74 percent to NT$165,2000 per ping, the quarterly poll showed.
Meanwhile, the number of transactions competed within 30 days plummeted 40.76 percent in the first quarter from the previous quarter, the poll said.
Taipei City and Taipei County saw the largest decline in housing supply, falling 51.41 percent and 46.59 percent to NT$40.1 billion and NT$41.3 billion respectively, although the two counties saw the greatest increase in deal prices, which rose by 2.81 percent and 4.06 percent to NT$379,8000 per ping and NT$169,800 per ping respectively, it said.
Housing prices could become more stable in the current quarter due to limited room for developers to reduce supply after such a huge decrease in the first quarter, Chang said.
Hua Chin-chun (花敬群), an associate professor in the department of public affairs management at Hsuan Chuang University, agreed, saying that developers should expect to see a competitive market from the second quarter onward.
The prospects for the commercial property sector, however, appear brighter, analysts said, in light of the recent warming in cross-strait relations.
Foreign investors reportedly are very interested in Taiwan's property market, with Hong Kong-based investment bank CLSA Asia-Pacific Markets thinking about investing US$100 million.
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