The local property market posted signs of steady growth in the first quarter of this year, with the monitoring indicator flashing “green” for a second consecutive quarter, a Ministry of the Interior quarterly report showed yesterday.
The report, conducted by the ministry’s Architecture and Building Research Institute from May 5 to June 4, showed the composite housing index advancing 1 point to 13 in the first quarter, up from 12 in the fourth quarter of last year.
“The property market had a better performance in the first quarter than in the fourth quarter of last year [due to strong economic growth],” Chang Chin-oh (張金鶚), professor of land economics at National Chengchi University, told a media briefing.
Chang said the economy expanded substantially in the first quarter, with money supply continuing to increase while interest rates remained at low levels, which benefited the property market.
Public expectations that the government would sign a trade pact with China also helped prop up housing prices during the period, he said.
Taiwan and China signed the Economic Cooperation Framework Agreement (ECFA) in Chongqing, China, yesterday afternoon.
The coincident index, which reflects current housing market conditions, rose 1.02 percent to 106.34 points quarter-on-quarter, while the lead housing index, which indicates market performance over the next three quarters, edged up 0.09 percent to 94.71 points from the previous quarter, the report showed.
However, the economist warned of some uncertainties facing the real estate market in the coming quarters given concerns over still-high unemployment, the ongoing European debt crisis and credit-tightening measures by mortgage lenders following the central bank’s interest rate hikes last week.
The report found that more than half of local businesses expected housing prices to remain at the same level or decline in the second half of this year, indicating rising perception that economic growth would be subdued.
“Forty-three percent of companies polled said that local property prices would decline in the second half, with less than 30 percent expecting increases in home prices,” Chang said, adding that nearly 25 percent remained neutral on the matter.
Chang said the central bank’s targeted prudential measures to curb property speculation would affect the behavior of local real estate speculators, which account for nearly 40 percent of home buyers.
“If these investors start to sell their properties, it would have a huge impact on the market ... When supply is greater than demand, property prices are bound to decline,” Chang said.
However, he said it would still take time, at least half a year, for the market to undergo a correction as liquidity in the market is still abundant.
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