As of last month new construction volume in northern Taiwan totaled NT$591.54 billion (US$19.69 billion) so far this year, down 9.5 percent from the same period last year. It is likely to shrink further as developers and builders opt to avoid uncertainty linked to the Nov. 29 elections, a report by the Chinese-language Housing Monthly (住展雜誌) said.
Despite the decline, the volume topped the three-year average by NT$79 billion, as concerns over the Nov. 29 nine-in-one elections drove builders to start new projects in the first half of the year, and lie low in the second half, at odds with normal seasonal demand, the report said.
“The supply side was braced for unfavorable rhetoric in the period before the elections in November, but was caught off guard when policymakers made moves in the second quarter” — as the industry had predicted unfavorable conditions from this quarter onward — the magazine’s chief editor Jim Shih (施絢傑) said in the report.
Heavier tax burdens on unoccupied homes and extended selective credit controls dampened purchasing interest and cooled transactions in construction, Shih said, adding that the tight contest in some districts had deepened cautious market sentiment.
Increasingly unaffordable housing tops the list of concerns among voters and both the pan-blue and pan-green camps have vowed to take drastic measures to address the issue.
Unfavorable political rhetoric feeds expectations of an imminent drop in prices and suppliers would prefer to stay on the sidelines until the volatility subsides, Shih said.
The chairman of Shining Construction Group and head of the General Chamber of Commerce Lai Cheng-yi (賴正鎰) said that his company and peers may adopt a wait-and-see attitude until after the 2016 presidential election, given the administration of President Ma Ying-jeou’s (馬英九) low popularity rating.
That attitude means there should be little room for price corrections on the part of builders as well as developers, and data in the first half confirmed this inflexibility, the report said.
The presale and new home market increased 6.9 percent to NT$898,000 per ping (3.3m2) in Taipei as of last month and picked up 6.03 percent to NT$422,000 per ping in New Taipei City, both new highs, the report added.
Home prices advanced 12.79 percent in Keelung and 12.61 percent in Taoyuan County, according to the monthly report.
Yilan County saw new construction volume reaching NT$11.03 billion in the first six months, more than 75 percent of the amount for the whole of last year, the report showed.
New home prices approached NT$500,000 per ping in Yilan county’s Jiaosi Township (礁溪) which is known for its hot spring facilities, Shih said.
Inflexible prices coupled with tightening measures might drive individual investors to buy property abroad to pursue higher returns, said David Chin (秦啟松), executive director of Asia Pacific International Property (亞太國際地產) said on Friday.
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