Increasing economic uncertainty and a negative wealth effect have depressed interest in housing purchases to a record low this quarter, dashing hopes of a strong comeback for housing transactions next quarter, analysts said yesterday.
Interest in purchasing a home declined to 50.19 percent this quarter, worse than 50.37 percent recorded in the second quarter of 2009 when the global financial crisis depressed trading, a survey by Chinatrust Real Estate Co (中信房屋) found.
“Whether the market can regain growth momentum hinges on the economic climate and the wealth effect as these issues sit on top of the list of people’s concerns,” company chairman Chris Cheng-Yu (鄭余正全) told a media briefing.
The “luxury tax,” introduced on June 1 to curb home prices, appeared to have had little impact so far as sellers remained unwilling to lower prices, while prospective buyers expect prices to continue to climb, the survey showed.
“The last three months saw the market locked in a pricing tug-of-war,” Cheng-Yu said. “The standoff is likely to end with sellers emerging victorious if the global financial markets show quick signs of stabilization.”
While nearly 50 percent of respondents expected heightening recession risks to dampen transactions in the coming months, 37.8 percent believed home costs would trend up, more than the 33.2 percent who held bearish views, the survey found.
The reason for this outlook is because Taiwanese see real-estate investments as the best defense against market volatility, Cheng-Yu said, citing the 30.6 percent of respondents who favored property as a hedge against risks, followed by precious metals at 30.2 percent.
Stanley Su (蘇啟榮), head researcher at Sinyi Realty Inc (信義房屋) echoed the conservative outlook on the housing sector for the next quarter, a historical high season.
“The fourth quarter is likely to see sub-seasonal performance as turmoil in global financial markets is bound to weaken confidence,” Su said at a separate news conference.
Prospective buyers, who have stayed on the sidelines because of the luxury tax, might drop the idea of buying altogether in case of an economic downturn that would lead employers to cut investment and hiring expenses, Su said.
People will refrain from home purchases if the outlook for the job market dims, Su said, adding that the presidential and legislative elections on Jan. 14 are adding to the uncertainty.
However, Sinyi failed to spot signs of a price correction, either.
“Sellers are extraordinarily stubborn this time around,” Su said.