Amid excess supply and an increase in prices, the nation's home buyers became more pessimistic during the third quarter about the prospects for the real-estate market next year, results of a survey released yesterday showed.
"Home buyers, especially in Taipei City and County, have taken a more conservative, wait-and-see approach as they expect property prices to further decline," Chang Chin-oh (張金鶚), professor of land economics at National Chengchi University, told a press conference yesterday.
The survey, conducted by the Institute for Physical Planning and Information early last month, showed that the property price confidence index for the third quarter had dropped to 88 points, a 12.9 point decline from the April-to-June period.
This was the lowest result since the second quarter of 2003 during the SARS outbreak.
The highest result of 131 points was registered in the first quarter of 2004, before the presidential election.
Using a scale of zero to 200, the confidence index measures the nation's real-estate sentiment. One hundred points indicates a neutral outlook.
Nearly 50 percent of the 2,400 respondents in the survey expected real-estate prices to drop within the next year, while only 26.7 percent believed the prices would continue to rise.
Chang saw the cooling property sentiment as a healthy sign, as it shows that buyers have become more rational and reluctant to jump headlong into an overheating market.
He expressed concerns, however, over the absence of a significant decrease in property investors, with nearly 20 percent of respondents saying they were still shopping for profit in the run-up to the elections, a 2 percent rise from the previous quarter.
"There is no sign that the elections will help prop up the future property market," Chang said.
With the notable exception of Kaohsiung, home buyers spent an average 5.8 months closing a deal, while 9.5 percent looked for bargains, the survey showed.
Residents in Taipei were under increasing mortgage pressure, with more than one third of their monthly earnings going toward repaying loans.
Real-estate brokers also felt the slowdown in the third quarter, with banks tightening loans, said Stanley Su (
"Banks now grant loans at less than 80 percent of the closing price," Su said.
The market nevertheless saw a slight rebound over the past two months, with prices fluctuating around 3 percent in greater Taipei, he said.
Su had a neutral view on future momentum, although land developers have shown greater confidence.
As international think tanks have revised upward their forecast for Taiwan's economic growth, Hung reiterated his confidence in the local economy based on stronger domestic demand and exports, although a possible slowdown in the
US, the EU and Japan next year would likely have a negative impact on export performance.