Tue, Jun 16, 2009 - Page 12 News List

Property prices stabilizing on rate cuts, excess capital

By Crystal Hsu  /  STAFF REPORTER

Although economic fundamentals remain weak, local property prices appear to have stabilized as a result of a series of rate cuts and excess capital, analysts said on Sunday.

Victor Chang (張欣民), a marketing consultant at Era Real Estate Taiwan (易而安不動產), who forecast in January that residential property prices would drop 10 percent this year, said the downward adjustment had ended in the first quarter, with products in prime locations returning to their levels from before the global financial crisis.

“The property market hit bottom in the first quarter, when real estate values and transactions contracted between 20 percent and 30 percent from the same period last year,” Chang said by telephone.

The phenomenon disappeared once the stock market regained momentum in March, encouraging property sellers who had been less willing to lower prices.

Property prices fell between 5 percent and 6 percent this quarter and could hold firm for the rest of the year in accordance with economic improvement, he said.

Chang said his earlier forecast that 90 percent of property brokers would lose their jobs appeared unlikely now that real estate agencies had started recruiting new employees.

However, Chang stood by his estimation that presale projects would shrink by as much as 50 percent this year.

Stanley Su (蘇啟榮), senior researcher at Sinyi Realty Co (信義房屋), said the housing market’s performance was more closely linked to that of the local bourse than the national economy so far this year.

Su attributed the link to idle funds and low mortgage rates that make owning houses less costly, especially for first-time buyers.

Su said property prices dropped 15 percent between September and March, after which the drop slowed to less than 10 percent in April and last month.

“Room for [price] adjustment decreased even further this month on anticipation of a brighter economic outlook,” Su said by telephone.

Sinyi Realty, the nation’s only listed property broker, also benefited from the improving market sentiment, posting commission income of NT$762 million (US$23.2 million) last month, an increase of 17.4 percent from a year earlier. The firm’s monthly revenues hit NT$943 million following President Ma Ying-jeou’s (馬英九) election in March last year, but plunged to NT$286 million last September.

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