The property market in the third quarter showed strong signs of a recovery thanks to improved consumer confidence and low interest rates, according to a report released yesterday.
The report, prepared by the Architecture and Building Research Institute under the Ministry of the Interior, showed that the nation's index of leading property indicators increased by 2.32 percent from the second quarter to 105.39 points, the highest in four-and-a-half years, signifying that the property market is expected to see a full recovery within the next three quarters.
"A mild recovery was certainly underway in the third quarter," Chang Chin-oh (
The institute's second-quarter report already noted that the long-depressed property market had bottomed out and was heading toward a slow recovery.
Yesterday's report reinforces the optimism, Chang said, as the upcoming real-estate rebound will be bolstered by improving consumer confidence and economic fundamentals, low interest rates for home mortgages, rising transactions and property prices and more licenses granted to land developers.
The report's said that in the third quarter the investment index climbed 2.02 percent, the construction index rose 0.51 percent, the transactions index rose 0.27 percent and the household occupancy index rose 0.46 percent.
Another positive factor could be continuation of the half-rate land value incremental tax. Chang said the proposal to keep the tax rate at half its normal level for another year would be welcome if the legislature finalizes the move soon.
According to a survey conducted by the institute in mid-November, both real-estate developers and the public's confidence in the local property market for the fourth quarter and the first quarter next year will likely continue to improve.
Of the companies polled in the real-estate sector, including construction firms, brokers and land appraisers, 72 percent expressed confidence in the market's recovery in the next two quarters and expect property prices to rise, it said.
Property prices on average rose 3.07 percent nationwide in the third quarter. In Taipei the rise was 1.18 percent and in Kaohsiung 1.38 percent. Prices in Taichung declined by 2.87 percent.
Chang, however, was cautiously optimistic about the market's expected recovery, which he said would be short-lived if land developers rush to complete more housing projects and so oversupply the market.
Instead, land developers should pay more attention to construction quality and the locations of future housing projects, which will be the deciding factors for home buyers, he said.
Despite the market uptick, uncertainties still loom, including the possible rise in interest rates next year and rising construction and labor costs.
Political instability created by the upcoming presidential election and cross-party tensions may also disturb the real-estate market, undermining the willingness of people to buy property.
The recent shortage of construction materials such as sand and gravel may also hurt the market, but Chang said the impact should be limited since the key to reviving the oversupplied property market is to raise demand.
The institute's director-general Hsiao Chiang-pi (
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