Chong Hong invests in Neihu property

Encouraged by a rising property market supported by various government incentives, Chong Hong Construction Co (長虹建設) said yesterday that it had purchased land in Taipei's Neihu district to construct residential buildings for sale or rent.

Chong Hong spent NT$101.43 million (US$3.1 million), or NT$2.1 million per ping (3.3m2), on the 482.9957 ping property in Neihu, the company said in a filing to the Taiwan Stock Exchange.

Chong Hong shares closed up 0.39 percent at NT$77.2 yesterday.

Construction companies are turning to the Neihu and Nankang areas as the supply or real estate in downtown Taipei City grows increasingly scarce. Real estate in Neihu and Nankang is comparatively cheaper, and values are expected to rise after the completion of the Neihu MRT in 2009.

The value of real estate in Taipei City has shown the highest growth nationwide, rising by 2.75 percent from last October to the end of March, a report released yesterday by the Department of Land Administration under the Ministry of the Interior showed.

Property prices were pushed higher by the record-high bidding prices for land released by the government, as well as soaring sales prices of high-end luxurious apartments, the department said in the report.

The value of urban real estate climbed 1.33 percent from last October to the end of March in a stable growth trend, the department said.

The rising prices have deterred first-time homebuyers. First-time buyers accounted for 37.1 percent of all housing purchases in the second quarter of the year, down from 37.7 percent in the previous quarter and 41.2 percent in the fourth quarter of last year, a report released by Evertrust Rehouse Co (永慶房屋) showed yesterday.

A survey the real estate agency conducted among homebuyers showed that 50 percent of respondents did not consider the next six months a good time to purchase real estate in Taipei City, saying prices were too high.

Rising consumer prices and interest rates and a decrease in housing loans offered by banks also contributed to the drop in purchases by budget-conscious first-time homebuyers, the report said.

Major banks, including the nation's three largest housing loan issuers, Bank of Taiwan (台灣銀行), Taiwan Cooperative Bank (合作金庫) and the Land Bank of Taiwan (土地銀行), raised their housing loan interest rates by 0.2 percent after the central bank increased its benchmark interest rate by 0.25 percentage points to 3.125 percent last month.

Local banks are also tightening credit. Taiwan Cooperative Bank, for example, decreased its maximum loan for properties in Taipei City to 80 percent of the purchase price, from 90 percent or more, and for houses outside of Taipei to 70 percent of the purchase price.