Presale housing projects in northern Taiwan dropped to a 14-year low of NT$11.8 billion (US$359.39 million) last month. The figure corresponds to an amount less than 30 percent of the total in June, as concerns over sluggish transactions drove developers to sit out the lunar Ghost Month.
Ghost Month, during which people tend to shun moving into new apartments, starting businesses or getting married in order to avoid bad luck, falls between Aug. 14 and Sept. 12 this year.
“Tradition aside, the nation’s poor economy and stock rout feed unease among prospective buyers,” Housing Monthly (住展雜誌) research manager Ho Shih-chang (何世昌) said in a telephone interview.
The magazine’s monthly business climate gauge moved to “blue” last month, from “yellow-blue” in July, indicating that the presale housing market has entered a recession.
Developers and builders put up 22 presale projects in Taipei, New Taipei City, Taoyuan, Hsinchu, Keelung and Yilan last month, with discounts of 25 percent to 60 percent, but failed to stir interest, Ho said.
Ho dismissed ongoing discount hype as mere advertisement rhetoric, to which potential buyers have grown immune, adding that many potential customers were asking for a 20 percent concession on floor prices.
The tug-of-war would continue to suppress future transactions unless the supply side made genuine and noticeable concessions, Ho said, adding that fundamentals were unfavorable for the sellers.
Property advertisements shrank 28.7 percent last month from July, as adverse weather conditions prevented prospective buyers from visiting construction sites, Ho said.
HouseFun, a property publication owned by Evertrust Rehouse Co (永慶房屋), also voiced a dim view, saying there were only three presale housing projects valued more than NT$1 billion during Ghost Month.
HouseFun head Ni Tze-jen (倪子仁) said he excluded Yilan from his survey for the duration of Ghost Month.
By that account, the construction volume reached only NT$4.7 billion, down 95 percent from the same period last year standing at about NT$100 billion, Ni said.
The figures reflected a sharp downturn of confidence on the developers’ side and the conservative strategy was helping the market digest surplus supply, Ni said.
“It is time for a price correction in the market in order to relieve the stifled transactions after a decade of boom,” Ni said.
Bleak sales last month suggested an extended soft patch for the upcoming fall season that starts late this month and continues through October, Ni said.
The central bank should consider lifting mortgage restrictions from more districts in New Taipei City if it was serious about supporting the economy, Ni said.
The monetary policymaker last month removed the districts of Yingge (鶯歌) and Bali (八里) from the restriction list, saying credit controls proved effective in curbing property speculation in those districts.
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