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Property index dips to new low

The local real estate market will come under mounting pressure in the coming quarters, with confidence in property prices dropping to a new low in the third quarter, a survey by the Architecture and Building Research Institute found yesterday.

The survey’s composite index of confidence in property prices dropped to a low of 56 points last quarter — even lower than the 90-point level recorded during the SARS outbreak in 2003 and the lowest since early 2002 when the survey started, Chang Chin-oh (張金鶚), professor of land economics at National Chengchi University, told a media briefing yesterday.

“The worst is yet to come,” he said.

The expected market correction this year was delayed by the euphoria in the runup to and after the presidential election, he said, but fundamental concerns over a slowing economy are now weighing on the market.

Chang voiced his opposition to the government’s recent measures to stimulate the property market, saying this would only prevent the market from hitting the bottom and starting to recover.

“Only price cuts by construction companies can help the market return to health,” Chang said.

The survey also showed that the price confidence index in Taipei dipped to the lowest among all cities at 50 points.

With luxury houses in Taipei being cut by about a third in the past few months, Chang estimated that property prices in Taipei would fall further by 30 percent.

But the government’s recent bailout measures will likely give a helping hand to some home builders, who may resist any price cuts.

The survey found that 82 percent of respondents, or home buyers — up from 41 percent in the second quarter — said they expected the freefall in property prices to persist into the third quarter next year.

In addition to price cuts, Chang urged home builders to upgrade their before and after-sales services to attract buyers.

The survey also found that the central bank’s aggressive interest rate cuts drew mixed reactions from potential home buyers, with 48.5 percent of respondents saying they wouldn’t purchase a property simply because of lower short-term interest rates, Chang said.

The local property market continued to be a buyer’s market in the third quarter, with the room for price negotiations and the duration for closing deals widening, he said.
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