Wed, Mar 30, 2016 - Page 14 News List

Developers curb projects to prevent housing glut

SOLID FOUNDATION:Concerns over soil liquefaction have caused an increase in demand for luxury homes, the Housing Monthly magazine research manager said

By Crystal Hsu  /  Staff reporter

Developers and builders plan to launch presale and new home projects worth NT$174.28 billion (US$5.33 billion) in the spring sales season, down 13 percent from a year earlier, to avoid a supply glut, the Chinese-language Housing Monthly said yesterday.

It remains to be seen if the central bank’s lifting of credit controls last week can invigorate the market after transactions plunged to a 14-year low last year.

“Some developers and builders have decided to give it a try after standing pat last year,” magazine research manager Ho Shih-chang (何世昌) said by telephone.

Most people prefer to wait and see if they can gain a better grasp of policy directions following the power transition on May 20, he said.

The spring sales season began yesterday and is to run through next month. Luxury homes, for which the central bank kept the mortgage limit at 60 percent, rejoin the market in the hope of reviving interest amid safety concerns over soil liquefaction.

Luxury homes have a solid foundation, making them more resilient to soil liquefaction, whereas old houses are more vulnerable and likely to sustain serious damage during a major earthquake, Ho said.

Demand for luxury homes has picked up since the Cabinet on March 14 launched an online database indicating areas prone to soil liquefaction, Ho said.

That explains why Continental Development Corp (大陸建設) is rolling out a luxury home project in Taipei’s Xinyi District (信義) and Yuanlih Construction Enterprise Group (元利建設) is selling newly completed apartments in the city’s Daan District (大安).

Both companies have declined to reveal their pricing policy and the market expects the former to cost between NT$2.5 million and NT$3 million per ping (3.3m2) and the latter between NT$2 million and NT$2.5 million per ping.

Luxury homes, especially in Taipei, have borne the brunt of tightening measures, noticeably soaring house taxes.

Taipei City Government has indicated a willingness to review the tax schedule that imposes extra levies on houses in popular locations and built with expensive materials.

“Building companies benefit from rate cuts more than potential home buyers, who would need greater incentives to join the market,” Ho said.

Lower interest rates enable developers and builders to pay lower borrowing costs, therefore bringing down default risks, Ho said.

The central bank said rate cuts would help maintain the nation’s financial stability.

On average, presale and new home prices have fallen 6 percent in the past 12 months, while existing homes have dropped by 10 percent, Ho said.

The pace appears to be inadequate as prospective buyers demand concessions of 10 to 15 percent, a recent survey by Evertrust Rehouse Co (永慶房屋) showed.

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