The volume of new construction projects in the six special municipalities in the first six months of the year rose 15 percent to 53,000 units, the highest in five years, as the property market benefits from improved confidence spurred by capital repatriation and urban renewal, analysts said yesterday.
The pickup is not nationwide as some developers seek to digest unsold houses in areas with heavy supply, while others prefer to wait to see how next year’s presidential and legislative elections go and how the US-China trade dispute evolves.
Taipei showed the strongest growth, with a 67 percent increase from a year earlier to 5,378 units, data released by the Ministry of the Interior showed.
Data on new building permits, construction and project launches reflect confidence on the part of developers, as they require the investment of new capital, personnel and building materials, Great Home Realty Co (大家房屋) research head Mandy Lang (郎美囡) said.
Only when presale projects put up decent sales and buying interest gains traction would developers start new constructions, making them a reliable gauge of confidence, Lang said.
The ministry since 2009 has released new construction data. It rose to a record 105,000 units for all of 2014 and plunged to 32,000 units in 2017 following a series of unfavorable policies to cool a heated property market.
Builders and developers over the past few years refrained from project launches and purchases of land, while giving priority to inventory adjustment to ease price correction pressure, Lang said.
The trade dispute has driven Taiwanese firms to diversify their investment and move part of their manufacturing capacity home, boosting demand for factories, offices and high-end residential space, Lang said.
“That accounted for a sharp increase in Taipei’s new construction volume,” she said, adding that eased regulations and loans for urban renewal also lent support.
Taichung had the most new construction by the number of units, with 12,992, or an increase of 58.8 percent year-on-year, as infrastructure improvement projects and increased population continued to attract new property funds, Lang said.
Kaohsiung saw a 30.5 percent gain as it raised its profile at home and abroad following the mayoral election in November last year, the real-estate broker said.
New construction volume posted declines of 13 percent, 12.9 percent and 4.4 percent in New Taipei City, Taoyan and Tainan respectively from a year earlier, government data showed.
H&B Realty Co (住商不動產) research director Jessica Hsu (徐佳馨) said that relatively high bases last year prompted developers to turn cautious about adding new projects in those three special municipalities.
The strategy makes sense in the run-up to the presidential election in January next year, as a considerable percentage of home buyers usually show patience and postpone purchase decisions until after voting, Hsu said.
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