Developers and builders launched NT$137.6 billion (US$4.47 billion) worth of presale housing projects during the just-concluded spring sales season, 55.5 percent lower than expected, as the grim sentiment extended to the supply side, although few would cut prices significantly to attract buyers, a survey by online property researcher HouseFun (好房網) showed.
The figure accounted for just 44.5 percent of a NT$230.9 billion HouseFun forecast before the sales season that runs from late March to the end of last month.
“The result reflects a downturn in sentiment among developers and builders, but is not all negative for the market,” HouseFun head Ni Tze-jen (倪子仁) said.
Companies are advised to digest inventory, especially in areas with heavy supply, given the prevalent expectations of a bear market, Ni said.
They can employ a more aggressive strategy when policy uncertainty settles and buyers regain confidence, the analyst added.
Still, the conservative strategy drove HouseFun to cut its presale market forecast by 21.8 percent to NT$860 billion for this year, from the previous estimate of NT$1.1 trillion.
A survey last week by Cathay Real Estate Development Co (國泰建設) confirmed the bleak showing, where presale and newly completed housing projects dropped by 34.7 percent annually to NT$205.8 billion last quarter.
VOLUME
Judging by volume, builders and developers put 11,907 new homes on the market during the January-to-March period, a reduction of 25.1 percent from a year earlier, the Cathay survey found.
The decline was nationwide, with New Taipei City reporting a contraction of 53.6 percent, Taoyuan and Hsinchu 55.2 percent and Kaohsiung 46.1 percent, in terms of sales amounts, the survey said.
The strategy of selling small, affordable houses in less popular locations is losing its appeal, as housing tax hikes and planned income levies on property gains scared away buyers, Takming University of Science and Technology real-estate professor Hua Ching-chun (花敬群) said.
The market is expected to soften further in the second half, when builders are expected to lie low for fear that presidential and legislative campaigns will drown out promotions.
NO BARGAINS
Regardless, major builders have showed little willingness to lower prices, thanks to their deep pockets and low interest rates, observers said.
Increasing land costs and limited land supply also diminish room for price adjustments, Cathay Real Estate said, expecting the sluggish market to persist for at least two years.
Hua held a grimmer view, saying the soft patch could last for five years.
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