New home construction totaled NT$178.5 billion (US$5.33 billion) in the final quarter of last year, shrinking 38 percent from a year earlier, as new property taxes and political uncertainty dampened buying interest, a report by Cathay Real Estate Development Co (國泰建設) and National Chengchi University’s Taiwan Real Estate Research Center (台灣房地產中心) showed.
The market is likely to remain soft this quarter and beyond, given a deteriorating economic environment and political uncertainty, with the opposition winning in last month’s presidential election, but unable to assume office until May 20, the report said.
“Builders and developers stayed on the sidelines last quarter as political uncertainty and new property taxes drove away potential buyers,” the quarterly report said.
The cautious sentiment may extend into the first half of this year because the market needs time to adapt to the new property taxes and the ongoing power transition, the report said.
The Greater Taipei area, where housing prices picked up significantly in recent years, bore the brunt last quarter, with new home construction plunging 53.4 percent in Taipei and 47.8 percent in New Taipei City compared with the previous year, the report showed.
The slump came even though the central bank cut interest rates by 12.5 basis points each in September and December, as expectations of price falls outweighed the benefits of cheaper borrowing costs, the report said.
On average, presale projects and newly completed homes nationwide cost NT$269,200 per ping (3.3m2), down 6.44 percent from three months earlier, it said.
Meanwhile, price concessions widened to 17.24 percent, while 30-day sales rates dropped to 8.79 percent, the report said.
Average housing prices stood at NT$759,600 per ping in the capital and NT$386,800 per ping in New Taipei City, dropping 5.11 percent and 0.34 percent respectively from the preceding quarter, the report said.
However, new home prices held firm in some parts of the nation, it said.
Housing prices in Taoyuan and Hsinchu edged up 1.99 percent to NT$218,700 per ping last quarter from three months earlier, as property funds continued to migrate there to take advantage of improved infrastructure facilities, the report said.
New home prices also moved up 2.66 percent last quarter in Tainan, thanks to self-occupancy demand and relative affordability, the report said.
Housing prices declined by a mild 1.75 percent to NT$198,800 per ping in Taichung and 8.08 percent to NT$181,200 per ping in Kaohsuing, the report said, attributing the retreat to a property fund flight.
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