Buyers still wary despite Q4 drop in house prices

By Kevin Chen  /  Staff reporter

Fri, Mar 01, 2013 - Page 13

Average prices in the nation’s property market fell in the fourth quarter of last year from the previous quarter, with residential properties costing an average of NT$8.94 million (US$301,100), down 3.35 percent quarter-on-quarter, or NT$223,000 per ping (3.3m2), down 5.11 percent, a government report showed on Wednesday.

Taipei had the highest prices, at NT$516,000 per ping, in the October-to-December quarter, a quarterly decrease of NT$12,000 per ping, or a 2.27 percent decline, according to a report released by the Institute for Physical Planning and Information (IPPI, 國土規劃及不動產資訊中心).

Greater Tainan reported the largest increase in unit price, up NT$13,000 per ping (11.4 percent) to NT$127,000 in the quarter, while Taoyuan and Hsinchu counties and cities saw the biggest price drop at NT$9,000 per ping (5.8 percent) to NT$146,000, the report said.

The non-profit institute was commissioned by the Ministry of the Interior’s Construction and Planning Agency to conduct the quarterly housing demand survey between Dec. 1 and Dec. 31 last year among 2,636 house buyers.

Housing costs across the nation last quarter averaged 8.3 times buyers’ annual income, down from the record 9.1 times in the July-to-September quarter, while mortgages accounted for 32 percent of buyers’ income in the quarter, down from 35.3 percent in the previous quarter, the institute said.

“[The report] indicates a slight improvement in house purchases in the fourth quarter,” the institute, led by National Chengchi University land economics professor Chang Chin-oh (張金鶚), said in the report.

However, the report’s results were far from reassuring for many homebuyers. According to Chang’s definition of home affordability, a reasonable range of house prices should be between four and five times a buyer’s annual income, with mortgage costs accounting for between 25 percent and 33 percent of monthly salaries.

In the nation’s major metropolitan areas, buyers in Taipei faced the heaviest financial burden in home purchases, Chang said, citing data which showed housing costs in the capital last quarter averaging 13.1 times buyers’ annual income, with average mortgage rates taking up 47.6 percent of a buyer’s payroll in the quarter.

By comparison, the ratio of housing prices to average annual income in Taipei was 14 times in the third quarter, with homebuyers on average spending 51.4 percent of their monthly salaries on mortgages, the report stated.

In a separate poll conducted by the institute, the confidence index on property prices in the final quarter of last year hit 120.1 points, indicating a positive sentiment in the market.

Using a scale from zero to 200, the confidence index measures real-estate sentiment, with a score of 100 indicating a neutral outlook.

However, last quarter’s score was down from the third quarter’s 127.3 and the second quarter’s 126.5, indicating that some prospective buyers remain cautious after the government’s real-price registration measure took effect on Aug. 1 last year, the institute said.

Moreover, the poll showed that homebuyers were less optimistic about the market’s prospects as the confidence score for the next 12 months was lower than that for the next three-to-six months.

In particular, the quarterly poll showed that the confidence index for Taipei had fared the worst among major metropolitan areas, indicating that many respondents were reluctant to chase higher prices in the future, the report said.