Taipei housing prices still on the rise

Chao speculated at an investment forum Nov. 11 that the price of domestic housing could rise 5 percent-10 percent annually, and even up to 50 percent in Taipei City within 3-5 years of the ECFA signing.

Tayher Lim, an analyst with CLSA Asia-Pacific Markets, one of Asia's leading brokerage and investment groups, forecast earlier this month that Taiwan's residential housing prices could rise 15 percent next year, higher than in Hong Kong, Singapore and China, because the limited amount of land in the government's hands could lead to a further supply squeeze.

The increasing number of potential buyers and smaller plots of land being auctioned off have led to stiffer competition in Taipei, Lim observed.

He said rebounding domestic consumer confidence and an increasing number of would-be buyers generated by the government'smore liberalized economic policy toward China will continue to boost the Taipei market.

The outlook for Taiwan's commercial property market is also bright because of closer ties with China, accrding to Sinyi Realty Assistant Vice President Ho Wei-hung.

Ho contended that despite limp demand for office space in the present recession, activity in Taiwan's commercial property market has remained brisk due to the rosy long-term market outlook as investors anticipate an influx of funds into the market following the signing of the MOUs with China.

Despite the optimism, however, a number of factors could conspire to derail the continuing boom foreseen by industry insiders.

According to a survey published earlier this year by Chang Chin-oh,a professor of land economicsat National Chengchi University (NCCU) , residential property prices in Taipei City have surged by 50 percent over the past three years, while average local household incomes have grown by only 2 percent over the same period.

Those trends are not sustainable and can be traced directly to speculation driven by expectations of future Chinese investment, Chang argued in a recent interview with CNA.

Deals by speculators accounted for at least 50 percent of residential real estate transactions over the past three years, based on information from private channels and realtors, according to Chang.

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