Mon, Sep 17, 2012 - Page 13 News List

New construction boom defies gloom

HOME SWEET HOME:Developers and construction companies are set to inaugurate nearly NT$300 billion worth of projects as sentiment stays bullish amid credit controls

By Crystal Hsu  /  Staff reporter

Taiwan’s new construction volume for the coming month hit an eight-year high, as developers and construction firms stay upbeat about the housing market, unfazed by credit tightening among state-run lenders and sluggish existing home sales last month, a real-estate survey showed.

Developers and construction firms aim to launch NT$290 billion (US$9.84 billion) of new homes and presale projects nationwide for the Sept. 28 season — starting this week and ending next month — up 55.5 percent from the same period last year, after housing prices emerged unscathed from a spate of tightening measures, the Chinese-language Housing Monthly (住展雜誌) said.

“New construction volume is at its highest in eight years as developers and construction firms pull out all the stops to initiate this year’s high season,” the publication’s spokesman, Ni Tzu-jen (倪子仁), said.

The 15 percent rally in construction and building materials’ share values last month lent support to the bullish sentiment, Ni said.

The sub-index bounced 26.28 percent as of Friday, outpacing the TAIEX’s 9.42 percent gain, Taiwan Stock Exchange data showed.

The Ministry of Finance’s plan to ease bans on sales of state-owned land in Greater Taipei injected some much-needed vigor to the property market that has managed to hold prices steady amid shrinking volume and government efforts to rein in housing prices, Ni said.

Most of the new home projects are concentrated in northern Taiwan, especially in the Sinjhuang (新莊), Tamsui (淡水), Sanchong (三重) and Sindian (新店) districts of New Taipei City (新北市), where housing prices are more friendly than in Taipei, the report said.

Major players, including Farglory Land Development Co (遠雄建設), Kindom Construction Corp (冠德建設), Hung Sheng Construction Ltd (宏盛建設) and Continental Development Corp (大陸建設), are all set to roll out new projects. However, only the project in Taipei’s Shihlin District (士林) by High Wealth Construction Co (興富發) qualifies as luxury housing.

The central bank defines luxury homes as those valued at more than NT$80 million in the Greater Taipei area and NT$50 million elsewhere in the country. Luxury home sales have cooled since June after the central bank capped loans for luxury houses at 60 percent of their value and dropped the practice of allowing borrowers to only pay interest and delay principal payments for up to several years.

Chang Chin-o (張金鶚), a professor at National Chengchi University’s land economics department, has long blamed soaring house prices on low interest rates and excessive liquidity.

Housing Monthly expects the property market to benefit from the US Federal Reserve’s announcement last week of a new round of quantitative easing measures to stimulate the US economy. However, Andrew Liu (劉學龍), managing director at international real-estate consultancy Colliers International Taiwan, disagreed, citing the government’s continued effort to tighten credit controls.

State-run Land Bank of Taiwan (土地銀行), Taiwan Cooperative Bank (合作金庫銀行) and Mega International Commercial Bank (兆豐國際商銀) recently raised interest rates on mortgage loans to above 2 percent and to above 3 percent for land financing loans, though the central bank’s benchmark discount rate remains unchanged at 1.875 percent.

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