The nation's property market will see gentle growth this year despite rising interest rates and a slower economy, but market watchers warned that a supply glut may curb the expansion.
"The real-estate market has remained healthy for the past six quarters, and we are optimistic that the momentum will continue this year," said Chang Chin-oh (張金鶚), a professor of land economics at National Chengchi University, while releasing a latest market report from the Ministry of the Interior yesterday.
The report, conducted by the ministry's Architecture and Building Research Institute, indicated that the index of leading property indicators for the fourth quarter of last year rose by 0.28 percent from the previous quarter to 105.95 points.
A survey conducted by the institute last month of developers, property agents and banking institutions showed expectations that the market will grow 7.97 percent during the first quarter, driven by the rising occupancy rates and bright sales figures.
The legislature's decision to permanently cut incremental land-value taxes from 40 percent, 50 percent and 60 percent to 20 percent, 30 percent and 40 percent, respectively, in January, as well as the reconciliation of cross-strait relations after Lunar New Year, helped to boost the market, Chang said.
One long-term incentive to the market is a potential amendment to the Real Estate Securitization Act (
Companies that were polled, however, have turned negative over the prospects for the second quarter, predicting the market will fall by 3.65 percent, on rising costs for construction materials and labor, according to the survey.
The economic downswing, rising interest rates, political turmoil after Beijing's passage of an "Anti-Secession" Law and oversupply of housing units this year are dampening growth momentum, Chang said.
"Property developers should not overly increase supply to disrupt the market, given that demand has comparatively shrunk in line with the deceleration of economic growth this year," the institute's director-general Hsiao Chiang-pi (蕭江碧) said.
Victor Chang (
The glut has capped property prices, keeping them at similar levels to the same period last year, Chang said.
Nevertheless, amid speculation over inflation and appreciation of the New Taiwan dollar, Chang said he expects home buyers this year will be seeking an investment, Chang said.
Meanwhile, the institute is creating an evaluation system for residential housing to benefit consumers, Hsiao said.
The institute has finished the draft of the system, which evaluates the interior of a property on eight criteria, including structure, fire prevention design, air circulation, maintenance and management, he said.
The system is expected to be completed by next year and implemented by 2007, Hsiao said.
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