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Real estate indicators weaken

A key indicator of the nation's real estate market sentiment slid to a five-year low in the fourth quarter of last year, a quarterly report released by a government institute showed yesterday.

The indicator sends a strong signal of an imminent slowdown after a four-year upswing, the report said.

The warning sign, however, went against a growing optimism among land development firms and property agencies after the Chinese Nationalist Party's (KMT) Ma Ying-jeou (馬英九) won the presidential election, the survey by the Ministry of the Interior's Architecture and Building Research Institute said yesterday.

The survey was conducted last month.

The report anticipated that allowing Chinese people to invest in local property markets as Ma promised in his campaign would boost demand and raise prices.

The reading of the nation's real estate sentiment index fell for a third straight quarter to 9, the lowest since the first quarter of 2003 and compared with 11 a year ago and 10 three months earlier, the report showed.

"Honestly, I am quite worried about a recession in the local real estate market. I hope this warning will help drive the market to a soft landing," said Chang Chin-oh (張金鶚), a professor of land economics at National Chengchi University.

The university is helping compile the index and survey.

"A rally in construction stocks recently do not mean a boom in the property market," Chang said. "After a four-year upswing -- which is the longest on record -- we expect a gradual slowdown to be coming."

During the three-month period ending on Dec. 31, the nation's property industry gave a "yellow-blue" light for the third quarter in a row.

The leading indicator, a tool to gauge the real estate market's sentiment for the next six months, dropped 3.68 percent to 98.69 in the final quarter of last year with four out of five categories registering negatively, compared to 102.46 in the third quarter.

The result represents a decline for the fourth consecutive quarter.

Chang said the group would have a clearer picture about the market after examining whether Ma fulfills his campaign promises and the resulting impact.

Until clear signs emerge in the quarterly sentiment report that market pessimism is abating, Chang said that home buyers should take a cautious attitude as demand was weakening based on the ministry's latest report.

Other negative signs include increasing housing mortgage interest rates and increasing consumer prices, which hit a 13-year high. The ministry's tally also showed significant increases in the number of troubled housing mortgages, which grew to 54,646 cases, marking the highest number since early 2006.
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