The nation’s new home market indicator flashed “yellow-blue” for a second straight month last month, suggesting it is shifting gears, as developers turned more upbeat, but transactions showed little improvement, the Chinese-language Housing Monthly (住展雜誌) said in a report yesterday.
The business climate gauge gained 3.3 points last month to 38.6, as developers placed more advertisements in a bid to boost transactions during the spring sale season, which runs from late March to early May, magazine editor Jim Shih (施絢傑) said by telephone.
Shih attributed the pickup to more active promotional campaigns, but added that it was still unclear if the strategy had paid off.
The magazine revised down its forecast on the total value of presale and newly completed houses by 34 percent to NT$300 billion (US$9.96 billion) this season, from its previous forecast of a record NT$450 billion, due partly to delays in the issuance of building permits, Shih said.
The downward revision still represents a 36 percent gain from NT$219.8 billion during the same period last year, but the publication warned against linking the increase to a fast recovery.
The sub-indices on presale projects and newly finished homes rose to 8.35 and 5.55 last month, from 7.63 and 5.0 in February, while the advertisement gauge climbed from 5.68 to 6.88, Shih said.
“The trend surely reflects a sentiment upturn on the part of suppliers and they are likely to spend more on advertising in the coming months,” Shih said.
Developers and builders are focusing their marketing resources in the first half and plan to lie low in the second half as the nation gears up for the seven-in-one elections, he said, adding that buyers are likely to stay on the sidelines until the political uncertainty settles.
It is better not to read too much into the increase in advertising dollars given the limited impact on transactions, the analyst said.
The sub-index on transactions was flat at 5.16 last month, while the price concession gauge was steady at 6.49, the magazine indicated.
More aggressive promotional campaigns do help increase the number of prospective buyers, with the sub-index rising from 5.38 to 6.15 last month, and should continue to raise the overall score this quarter, Shih said.
“The demand side appears cool-headed this time around, thanks to increasingly unaffordable housing,” he said.
Smaller apartments in locations with convenient transportation links dominated the market and should remain popular going forward, the analyst said.
In related news, foreclosure auctions in the nation’s five special municipalities dropped drastically last quarter due to retreating purchase interest, H&B Realty Co (住商不動產) said.
The price gap between foreclosed houses and market rates has rapidly narrowed in recent years, prompting buyers to lose interest, the broker said, adding that potential ownership disputes further weakened their appeal.