Domestic property prices could drop between 10 percent and 20 percent over the next six months and thus spur buying sentiment, the president of Evertrust Group (永慶集團) said yesterday, citing the large pool of vacant office and shop space for sale and weak rental levels.
“If the transaction volume [on the property market] remains weak in the fourth quarter, the market should expect prices to drop because buyers won’t go for overpriced units,” Benson Liao (廖本勝) said.
There is no shortage of vacant office and shop space — both for sale and for rent — and property owners are collecting lower rents than the past few years. This, coupled with the fact that the nation’s economy has not recovered from the financial crisis, means the “real estate market is in an awkward position with a lot of over-priced [properties], which puts consumers off,” he said.
If property prices fall another 10 percent to 20 percent, the market should attract more buyers looking for homes or investment targets, he said.
Evertrust Rehouse Co (永慶房屋) yesterday released the results of a quarterly survey with more than 2,000 respondents, polled between Sept. 14 and Sept. 21 on their views of the real estate market.
Fifty-two percent of respondents said they believed the second half of the year was a good time to buy.
This compared with 62 percent in the second quarter, meaning that more potential buyers are waiting with their purchase plans. Forty-four percent said next year would be a better time to enter the market, representing a rise of 18 percentage points over the second quarter.
About half of respondents felt property prices would likely rise in the near term — a sentiment shared in a similar study released by competitor Chinatrust Real Estate Co (中信房屋) on Sept. 28.
Evertrust’s poll found that 53 percent of respondents felt property prices would rise in the next 12 months, compared with 54 percent in the second quarter.
“The domestic real estate market is seeing an imbalance between supply and demand. Prices are now climbing to a new high that most people can’t afford,” said Chuang Meng-han (莊孟翰), an associate professor of industrial economics at Tamkang University.
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