The local property market had fully recovered by the fourth quarter of last year, flashing a green light for the first time since early 2007 amid concerns over the health of a liquidity-driven rebound in the past year, a Ministry of the Interior quarterly report showed yesterday.
“Amid unstable signs, the property market has quickly rebounded from the worst blue-light condition in the first quarter of last year to signal a rosier green-light in the last quarter,” Chang Chin-oh (張金鶚), professor of land economics at National Chengchi University, told a media briefing announcing the quarterly report.
The study was conducted and released by the ministry’s Architecture and Building Research Institute.
The nation’s composite housing index climbed to a lower green-light level of 12 points last quarter, up from the 10-point yellow-blue light level in the third quarter of last year and the six-point blue light level in the first quarter of last year.
The leading housing index, used to forecast market performance over the next three quarters, also jumped by 2.21 percent quarter-on-quarter to 94.63 points last quarter. The coincident index, which reflects current housing market conditions, rose 2.09 percent to 105.26 points at the same time.
Those indicate the local housing market has warmed up and is likely to continue its upward trend in coming quarters, Chang said.
However, the sector still faces some unstable market forces such as a decline in the ratio of property use, judging from household electricity consumption, and upcoming interest rate hikes or possible credit tightening measures by mortgage lenders, Chang said.
In particular, the ratio of self-use properties has shown a significant decline of 1.86 percent quarter-on-quarter in the fourth quarter of last year, which suggests that many more households have been vacant since the owners may be only aiming at capital gains from their property investments, he said.
Compared to the quick recovery last year, the local market’s previous down cycle before 2003 took four years to recover along with healthier economic fundamentals and an upturn in both corporate earnings and employee incomes he said, urging both land developers and home shoppers to remain prudent.
The study, moreover, found that property-related businesses are feeling optimistic about the market’s future prospects.
Some 40 percent of businesses polled expected further improvement in the local economy in the second quarter of this year. Another 42 percent remain neutral while only 18 percent expressed doubts, the report showed.
The majority 73 percent of businesses polled also agreed that the planned economic cooperation framework agreement would provide a boost and fuel property price hikes by the end of this year.
Some 32 percent of surveyed businesses, including financial institutions, expected to see a price hike of between 3 percent and 10 percent by the year’s end and another 32 percent forecast a smaller hike of 3 percent while 27 percent were doubtful.
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