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Housing prices expected to rise even as sales drop

"The number of housing units sold dropped by 9.4 percent last year from the year before, which can be attributed to Taiwan's increasingly M-shaped and aging society."

Mu Chun-sung, chairman of the Taiwan Construction Development Federation

The housing market experienced a new phenomenon last year, with prices surging even though the number of units sold fell -- and industry insiders expect more of the same this year.

"Sales grew last year by 14.2 percent year-on-year to NT$620.35 billion [US$19.95 billion] as a result of rising property and commodity prices. However, the number of units sold dropped by 9.4 percent last year from the year before, which can be attributed to Taiwan's increasingly M-shaped and aging society," Mu Chun-sung (穆椿松), chairman of the Taiwan Construction Development Federation (台灣建築開發公會), told a press briefing yesterday.

For example, Taichung City, which had the second-highest annual growth in housing sales last year at 59.8 percent, saw a 9.2 percent drop in the number of units sold, as demand for larger and higher-priced homes rose, a report by the federation showed.

"This phenomenon will continue this year under the influence of high inflation, with housing sales expected to increase by 10 percent year-on-year to NT$700 billion," Mu said.

Soaring international commodity prices have led to the price of steel reinforcement bars jumping from NT$21,000 per tonne before the Lunar New Year holiday to NT$28,500 per tonne now.

"The rising price of steel reinforcement bars has increased construction costs by NT$4,000 per ping [3.3m2]," Mu said, adding that a housing price hike was unavoidable as a result.

The federation said prices for luxury housing may continue to grow by between 20 percent and 40 percent this year. Limitations on the budget housing market will keep price hikes there to between 5 percent and 10 percent, it said.

Mu said he was upbeat about the property market this year, as rising labor costs in China are expected to prompt nearly one-quarter of China-based Taiwanese businesses to repatriate their capital -- estimates range up to US$75 billion. This influx of money could benefit the property market, he said.
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