Taiwan’s property market may fall into recession next year, as inflation and an economic slowdown deter buyers, a government report shows.
The property-market leading index, a gauge for conditions three quarters ahead, fell 2.96 percent in the April to June period from the previous three months, the Ministry of the Interior (MOI) said in a report yesterday.
The ministry’s index tracks inflation, loans to the construction industry, GDP, money supply and the performance of construction shares.
Most companies expect property prices to fall in the fourth quarter, the August survey by the ministry showed.
Last month the government cut its full-year economic growth forecast to 4.3 percent from 4.78 percent.
The second-quarter expansion was 4.32 percent, the slowest pace in more than a year. The Directorate General of Budget, Accounting and Statistics projected an inflation rate of 3.74 percent for this year, which would be the highest since 1994.
“The property market is likely heading into an obvious slowdown,” Ho Ming-chin (何明錦), director-general of the ministry’s Architecture and Building Research Institute, said at a press conference in Taipei yesterday.
“We suggest that market participants be more careful,” Huang said.
Sixty percent of companies surveyed expected home prices to fall in the fourth quarter, compared with 7.1 percent that said prices would climb, the survey found.
A total of 192 property market-related companies were interviewed for the survey in August.
Property-market indicators “turned around” for the worse in the second quarter, prompting buyers to “hesitate,” Chang Chin-oh (張金鶚), land economics professor at National Chengchi University, said at the same conference.
Building permits fell 5.3 percent in June from the previous month, after rising 8.8 percent in May and 11 percent in April, the ministry said.
Expectations the government of President Ma Ying-jeou (馬英九) would boost real estate prices helped lift sentiment in April, Chang said.
“The force for the market to fall is very strong,” Chang said.
“The chances for a recession in the market will increase next year,” Chang said.
The 35-member construction subindex fell 39 percent this month, making it the worst performing group on the Taiwan Stock Exchange.
The benchmark TAIEX dropped 19 percent.
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