Thu, Dec 28, 2006 - Page 12 News List

Nation's real estate market shows signs it is cooling down

By Jackie Lin  /  STAFF REPORTER

The nation's real estate market is facing a slight downturn in the near future as industry-related companies showed a less optimistic outlook, according to a report released by the Architecture and Building Research Institute yesterday.

A report authorized by the Ministry of Interior said that the composite index measuring the housing market was 12 points for the third quarter, down from 13 points in the previous quarter, flashing a green light for the fourth straight quarter to show the market is stable overall.

The institute director-general Ho Ming-jing (何明錦) said the market last quarter remained stable as the index of leading indicators -- which includes property stock index, consumer price index and GDP -- rose 0.17 percent over the second quarter.

The index of coincident indicators, which comprises standard lending rates, standard unit prices of new housing projects and others, dropped 0.6 percent, he said.

Survey

The institute conducted a survey on construction companies, real-estate brokers, financial institutions and industry-related companies, between Nov. 15 and Dec. 1.

It found that 16 percent of those polled said they were positive about the market outlook for the next quarter, while 35 percent said they believed the market would go down and the remaining 49 percent said the market would remain unchanged.

"Although most companies still feel optimistic about their own operations and believe prices will remain buoyant, they are worried about capital flows, the number of new housing projects launched, sales and financial institutions' willingness to conduct mortgage business," the institute said in the report.

Pessimism

Even companies in the north of the nation started to express pessimistic expectations, narrowing the difference which used to exist between property developers in the north and south, it said.

In retrospect, the housing market was sizzling this year. The nation is expected to post a growth rate of 4.39 percent, compared with 4.03 percent last year.

Consumer confidence on purchasing durable goods, such as houses and automobiles, has bucked the trend to climb when savings rates remain low.

The economic benefits to be generated after the high-speed rail system starts operation have also given the real estate market a boost, the institute said.

Looking to the future, the report warned that supply and demand in the housing market might experience a slight imbalance as the economy is expected to expand at a slower rate next year.

As a result of a short-term glut of supply, housing prices might at most stay at the current level or adjust downward, it said.

It added that homebuyers and speculators should take a more conservative approach before investing.

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