Existing home transactions in the nation’s major cities contracted 32.6 percent in the first quarter year-on-year as expectations of price declines, holiday disruptions and soil liquefaction concerns sank the market to an 11-year low, government data showed.
There were 32,148 housing deals during the January-to-March period in the six special municipalities, local government data showed.
“The market remained enveloped in pessimistic sentiment last quarter, but the situation might improve this quarter with lower interest rates and lifting of credit controls,” Umei Realty Co (優美地產) analyst Yeh Li-ming (葉立敏) said in a report.
Taipei led the decline with transactions shrinking 38.6 percent to 3,978 units, worse than when the global financial crisis hit in 2008, when quarterly deals hovered at about 16,400, Yeh said.
Soaring house prices and property taxes in the capital accounted for the slump, Umei Realty said.
The city government levied extra taxes on upscale homes in prime locations built with expensive materials on the grounds that they benefit most from convenient transportation links and various other publicly funded infrastructure.
The central bank keeps the mortgage ceiling of 60 percent on luxury homes valued at NT$70 million (US$2.16 million) or more in Taipei, NT$60 million in New Taipei City and NT$40 million elsewhere. Mortgages average 70 percent for non-luxury homes.
New Taipei city fared poorly with transactions falling 37.1 percent to 6,942 units last quarter, as unaffordability swept across booming districts with fast-growing supply.
Although sellers agreed to offer discounts of between 5 and 10 percent, buyers demanded greater concessions out of fears that prices would continue to fall, Evertrust Rehouse Co spokesman Lin Tai-lung (林泰隆) said.
“Compared with rate cuts, price adjustments are much more effective at motivating buyers,” Lin said.
Holiday disruptions accounted for a sharp increase in transactions last month from February, which should not be taken as a sign of a recovery, Lin said.
Transactions tumbled 25.3 percent to 6,078 units in Taoyuan and declined 35.1 percent to 6,389 units in Taichung, the local governments said on their Web sites.
Southern Taiwan saw similar woes as transactions dropped 28.3 percent to 3,148 units in Tainan and softened 28.5 percent to 5,613 units in Kaohsiung, official data indicated.
A Feb. 6 earthquake depressed sales in Tainan, where real demand used to sustain the market.
Buying interest picked up noticeably toward the end of last month, but it remains to be seen if that translates into a concrete increase in transactions, Housing Monthly analyst Ho Shih-chang (何世昌) said.
The nation’s economic weakness, which drove the central bank to cut interest rates three times in the past six months, indicates caution should be employed, Ho said.
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