RISING SUPPLY AND PRESSURE:Developers added to the total value of properties on the market in the fourth quarter, but said rising costs would halt a price correction
By Crystal Hsu / Staff reporter
The new home market last quarter remained mired in sluggish trade, but developers held prices firm, supported by low borrowing costs and the central government encouraging urban renewal, 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) said last week.
Continued economic recovery at home and abroad lent support to the sentiment on the part of suppliers, even though buyers continue to prefer to wait and see while uncertainty pans out.
Developers and builders put NT$182.9 billion (US$5.83 billion at the current exchange rate) of presale projects and new homes on the market during the October-to-December period, an increase of 2.5 percent from the same period in 2015, the report said.
“I do not see room for a price correction going forward with construction costs on the rise and set to climb higher if the US dollar gains value against the New Taiwan dollar, which would make imported building materials more expensive,” Highwealth Construction Corp (興富發) founder Cheng Chin-tien (鄭欽天) said last month.
Cheng said he saw inflationary pressure gathering pace following property tax hikes and new labor rules that require more overtime pay and annual leave for workers.
Assorted taxes accounted for 60 percent of the NT$3 billion in pretax profit the company earned from an apartment project last year, Cheng said.
On average, new homes in Taiwan cost NT$11.4 million per unit in the period, or NT$272,700 per ping (3.3m2), a 2.34 percent increase from three months earlier, the report said.
Small apartments with two to three bedrooms continued to dominate the market, as they remain relatively affordable to first-time buyers and people with investment needs, it said.
It is easy to find tenants for such apartments, which could generate rental incomes of 5 percent for people keen to digest idle capital, Shining Construction Group (鄉林集團) chairman Lai Cheng-yi (賴正鎰) said last month.
Price concessions stood at 18.26 percent, a 5.15 percent increase from the previous quarter, reflecting a widening gap between sellers and buyers over house value, the report said.
The 30-day sales rate stood a 9.22 percent, down 17.6 percent from three months earlier, in line with dwindling buying interest, it added.
For the whole of last year, new construction volume declined 30 percent from a year earlier, while transactions slumped nearly 40 percent, the report said, adding that the decline was across the board.
The research team said it expects the market to stabilize this year, as the economy has come out of the woods, the central bank has held interest rates low and the central government is encouraging urban renewal.
Policymakers are formulating tax cuts, preferential floor space ratios and other incentives to remove barriers for renewal bids, they said.