Sat, Jan 03, 2009 - Page 12 News List

Analysts gloomy on real estate

PRICES TO PLUNGE: Consultant Victor Chang predicted that residential property prices would fall by 20 percent as the standoff between buyers and sellers is finally concluded

By Crystal Hsu  /  STAFF REPORTER

After a roller-coaster performance last year, local property prices are expected to fall up to 20 percent this year as the tug of war between sellers and buyers comes to an end, analysts said yesterday.

Property prices shot up in the second quarter of last year following the election of President Ma Ying-jeou (馬英九), who pledged to turn the economy around by thawing cross-strait ties and allowing Chinese investors to buy commercial property in Taiwan.

The sentiment of euphoria was replaced in the summer by worries over the turmoil on Wall Street that has since hit exports and consumer spending. Residential property prices fell 20 percent in the second half, with the market expected to remain bearish this year.

Benson Liao (廖本勝), president of Evertrust Group (永慶集團), said property prices would be more flexible in the first half of this year when many pre-sold housing units would be completed and developers, as well as investors, would come under pressure to trade them for cash.

Liao said residential property prices would have to drop another 10 percent to 15 percent to motivate prospective buyers.

The realtor predicted that newly-competed and older units would dominate the market this year as developers shy away from launching pre-sold projects because of unprofitable land costs.

Victor Chang (張欣民), a marketing consultant with Era Real Estate Taiwan (易而安不動產), voiced a gloomier view, saying residential property prices would decline 20 percent and transactions would contract at least 10 percent this year.

Chang said that the market for pre-sold apartments would plunge 50 percent and the overall market may not see any signs of recovery until next year.

Regionally, the consultant said housing units in the center and the south of the nation would suffer larger price falls than their counterparts in the Taipei area, while units in suburban areas would prove less popular than units in downtown areas.

The Taiwan Stock Exchange’s building materials and construction subindex, which reflects the general share performance of the real estate sector, dropped 52.04 percent last year, compared with a decline of 46.03 percent on the benchmark TAIEX, stock exchange data showed.

To help boost the real estate market, the government has been implementing a series of policies to help developers, including a proposed bill that would make possible the securitization of properties under development as well as undeveloped land.

On Dec. 22, the legislature’s Finance Committee approved the first reading of the bill, which requires two more readings before it becomes law.

Chang Chin-oh (張金鶚), a professor of land economics at National Chengchi University, said the government’s efforts to aid developers would serve to delay the market’s recovery.

The professor noted developers and investors have refused to lower prices on expectation of a bullish market following a series of interest rate cuts and other stimulus measures.

But nothing short of price cuts could facilitate an end to the standoff in the market between sellers and buyers, the professor said.

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