Tue, Jan 30, 2007 - Page 12 News List

Consumers shy away from hot property market

CONSERVATIVE Three-quarters of respondents in a poll of 1,124 people said that they had a negative outlook about purchasing new homes

By Amber Chung  /  STAFF REPORTER

Consumers are now turning bearish about the previously sizzling property market this year as already high housing prices shoot through the roof, according to a survey released by Evertrust Rehouse (永慶房屋) yesterday.

The survey, which polled 1,124 people from Jan. 15 to Jan. 21, showed that 76.2 percent of respondents expressed conservative sentiments about the housing market this year, mainly because of concerns about high property prices.

Only 16.9 positive

Only 16.9 percent of those polled reported feeling positive about investing in real estate this year, citing expectations for an economic recovery and improvements in the cross-strait relationship, the poll said.

"This can be deemed as a warning sign for the property market," Benson Liao (廖本勝), president of Evertrust Rehouse, one of leading housing agents in the nation, said in the report.

The results showed that the soaring property prices in the wake of enthusiastic overseas Taiwanese and foreign investment have exceed the level that the public can afford, Liao said.

Average house prices in Taipei are estimated at 10.5 times the amount of average annual income, higher than the level found in Hong Kong, South Korea and Tokyo, Liao said, citing data from Fubon Securities (富邦證券).

Property bubble

The survey also showed that up to 60 percent of those polled worried that the property bubble could burst this year because of a supply glut.

Macquarie Research, which had been bullish about the Taiwanese real-estate sector, said earlier this month that it was now cautious because of margin pressure concerns.

Home buyers seem to have become more reluctant to absorb the higher prices, it said.

The company was thus concerned whether developers could continue to pass on the land price increases to home buyers, the Australian brokerage said.

Given the slow increase in annual disposal income in Taipei, which is at estimated 1 percent for the next three years, the annual growth in housing prices in the city is expected to slow down to 5 percent this year.

The grow is expected to drop further to 3 percent next year, Macquarie said.

Macquarie predicted some profit-taking by speculators was likely to happen before or after the presidential election, creating more uncertainty for the Taiwan property market next year.

Take profits

The brokerage suggested that investors take profits on property-related stocks now given the expected slower momentum this year.

Macquarie aslo downgraded ratings on both Chong Hong Construction (長虹建設) and Huaku Co (華固建設) to underperform from outperform.

Macquarie changed its rating for Sinyi Realty Inc (信義房屋) to underperform from neutral to reflect its growing concern over margin pressures.

However, it appeared that not every company shared the same pessimism.

Shin Kong Financial Holding Co (新光金控) chairman Eugene Wu (吳東進) said the company was looking to buy property in Taipei's Xinyi District and in Taichung.

High return locations

The company targets an investment of approximately NT$10 billion (US$303.8 million) in buildings that have an annual return exceeding 4 percent and good locations this year, the Chinese-language Commercial Times reported yesterday.

Last March, Shin Kong's flagship Shin Kong Life Insurance Co (新光人壽) acquired two residential parcels of state-owned land in downtown Taipei for NT$6.38 billion, or NT$2.74 million per ping (3.3m2).

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