Presale and new-home market slumps

POWER OF SUGGESTION::The minister of finance and FSC chairman’s speeches about a property fund flight has negatively impacted the industry, the report said

By Crystal Hsu  /  Staff reporter

Mon, Feb 17, 2014 - Page 13

The presale and new-home market flashed “blue” last month, the first recessionary signal since the fourth quarter of 2008, reflecting sluggish interest and sales after government officials warned of property fund flights, a survey by Housing Monthly (住展雜誌) showed.

The cyclical gauge showed a score of 31 last month, down from 36 in December last year, indicating that the new-home market slipped into recession as buyers turned cautious in the wake of speeches by officials, magazine spokesman Shih Shuan-chieh (施絢傑) said.

The retreat came after Minister of Finance Chang Sheng-ford (張盛和) and Financial Supervisory Commission Chairman William Tseng (曾銘宗) predicted a property fund flight this year, with home prices having likely already plateaued and investors staking up equity holdings with the US’ tapering of its quantitative easing program.

“The results show speeches by government officials, intended or not, have influence over the market,” Shih said.

Last month saw the number of prospective buyers and home deals slump to levels as low as during the global financial crisis in 2008, with even smaller new construction volume, the survey found.

Potential buyers dropped by 5 percent to 10 percent last month from the previous month, while transactions fell between 10 percent and 20 percent, Shih said.

Despite the tepid trading, sellers did not soften prices much with the price concession index moving in a tight range, the survey indicated.

Builders and developers opted to cut supply and stay on the sidelines, pushing presale projects down to NT$7 billion (US$231 million), Shih said, adding that they probably calculated that the sentiment would not last long.

Farglory Land Development Co (遠雄建設), one of the nation’s major listed builders, stepped up campaigns during the Lunar New Year holiday to promote projects in different sites, therefore mitigating the fall of the advertisement index, the survey said.

Looking forward, Housing Monthly expects the market to stage a gradual comeback toward the end of the first half of the year.

Developers and builders are planning to roll out presale projects in Taipei’s Beitou District (北投), and in the Sijhih (汐止), Yonghe (永和), Linkou (林口) and Sinjhuang (新莊) districts of New Taipei City (新北市), the magazine said.

Small apartments may no longer dominate the new-home market this year, as some developers are to promote medium-sized and large houses to fuel relocation demand, Shih said.

“It remains to be seen if such products will become popular,” Shih said.