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Housing slump persists in Q3: report

The real estate market continued to suffer from a downturn in the third quarter, with a composite measure of the housing market showing a large drop of 1.85 percent from the previous quarter, a report by the Architecture and Building Research Institute said yesterday.

The composite index of the property market plunged to 101.78 in the third quarter, Ho Ming-chin (何明錦), director-general of the institute under the Ministry of the Interior, told a press conference.

The leading index, which provides an outlook on the property market's prospects in the next three quarters, also dropped slightly by 0.21 percent sequentially to 102.46 in the third quarter, Ho said.

"But the leading index has dropped for three consecutive quarters, which indicates that the market has begun to make adjustments," said Chang Chin-oh (張金鶚), a professor at National Chengchi University's department of land economics.

Chang added that the market was unlikely to rebound for one or two more quarters.

With the highest score set at 20, the monitoring indicator dropped one point quarter-on-quarter to 10 in the third quarter, flashing a "yellow-blue" light -- signifying a slowdown -- for two consecutive quarters.

"The real estate market could slip further because of oversupply and overpricing," Chang said. "Home buyers and investors need to be more careful and cautious when making decisions."

A poll conducted by the institute also showed that 61 percent of the 143 surveyed companies believed the property market would further deteriorate; a mere 9 percent thought the market would rebound next quarter.

Meanwhile, a real estate agency report said that the M-shaped society phenomenon had begun to affect the local property market as sales of houses that cost less than NT$6 million (US$184,500) per unit dropped 10 percent last month from a year earlier.

However, sales of upscale properties worth more than NT$30 million per unit jumped 70 percent, a report by Yungching Real Estate Agency (永慶房屋) said.

"First-time buyers and wage-earners fear that rising interest rates and tight bank credit may dent the market and are more conservative in buying homes even though they can afford those lower-priced properties," said Liao Ban-sheng (廖本勝), general manager of Yungching Real Estate Agency.

Home buyers with higher income, on the contrary, were not affected by the real-estate market's fluctuations since they buy higher-priced units that offer more sustainable value, he said.
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