New home construction totaled NT$114.4 billion (US$3.51 billion) in the first quarter, shrinking 44.4 percent from the same period last year, a report showed yesterday.
However, buying interest picked up modestly in March after the central bank cut interest rates and eased mortgage restrictions, Cathay Real Estate Development Co (國泰建設) and National Chengchi University’s Taiwan Real Estate Research Center (台灣房地產中心) said in the report.
Pundits said price corrections of up to 20 percent are necessary to facilitate transactions and the government must halt unfavorable policies to avoid a hard landing.
“The incoming administration should postpone talks of inheritance tax hikes until the economy recovers to avoid further hurting the property market,” Tamkang University professor of industrial economics Chuang Meng-han (莊孟翰) said by telephone yesterday.
Land developers and property builders have been struggling to digest inventories with little success, because buyers remain on the sidelines for fear of price declines, said Chuang, whom the government usually consults on the housing market. Some presale project buyers would rather forfeit their deposit than go through with their purchase agreements, because they may incur greater losses when the construction is completed, Chuang said.
It is common for builders and developers to offer free interior decoration, home appliances and other gifts in the hope of boosting sales, he observed.
Thirty-day sales rates slid to 8.13 percent during the January-to-March period, the quarterly report indicated, suggesting the market has yet to hit bottom. Price concessions hit 17.42 percent, widening by 1.03 percent from the preceding quarter, it showed.
Government efforts to make the nation’s wealth more equitably distributed make sense, but they should wait for a couple of years when the economy turns around, Chuang said, adding that higher taxes would inevitably raise holding costs, further slowing transactions.
Chang Chin-oh (張金鶚), a land economics professor and longstanding critic of soaring housing prices in the nation, said unreasonably high prices accounted for the sluggish market and corrections are necessary to solve the problem of housing unaffordability.
“Houses should not be turned into investment products as seen in the past decade, because the practice deprives the ordinary public of a fair chance of owning a shelter and threatens social stability,” Chang said.