Thu, Jun 14, 2007 - Page 11 News List

Dip in confidence index points to property downturn

INFLATED? Red-hot house prices might cool slightly, according to the latest report from the council for Economic Planning and Development

By Jessie Ho  /  STAFF REPORTER

A decline in the homebuyers' confidence index suggests that the nation's bullish property market is likely to see a downturn, a Council for Economic Planning and Development report said yesterday.

The composite confidence index was 104.77, down by 5.74 points from the previous quarter, the report said.

The confidence index for the near-term declined by 2.31 points from the previous quarter to 111.17, and the index for future house prices dropped further by 9.17 to 98.37 points, the report said.

The previously positive momentum behind house prices may weaken because of the decreased demand for investment, the report said.

Signs of a possible downturn in the property market were also reflected in the ratio of average house prices to average annual salaries, the council said yesterday.

The nationwide ratio for the first quarter of the year was 6.6 -- meaning that the average person needs to save every dollar he or she earns for 6.6 years to be able to afford a house. The ratio was largely unchanged from the fourth quarter last year, the council said.

In Taipei City, the ratio declined from 8.8 to 8.1, suggesting that investors were alert to the idea that house prices might be inflated, the council said.

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