Real estate prices may decline despite bullish outlook: scholar

The return of bullish sentiment to the local bourse has been seen as a good sign for the property market, with many developers ready to launch major projects this year, the Central News Agency said.

But Chang Chin-oh, a land economics professor from the National Chengchi University, indicated that real estate prices will be trending down this year, judging from the demand freeze in the fourth quarter of 2011, according to CNA.

Prices stayed high in the fourth quarter, but transaction volume was low, Chang said.

He said currently there is a price confusion and mixed opinions about the future pricing trends in the real estate market.

If developers choose to cut prices, transactions would shoot up immediately, Chang said.

But the individual developers' ability to cut prices will depend on their financial health, he said.

The professor noted that financial institutions are tightening credit to property developers in line with the government policy to curb housing prices.

Chang said financial institutions' lending to the real estate sector will serve as an important indicator of the price trends of the property market.

Despite Chang's caution, major real estate developers remain optimistic that the market will be “stable with a good outlook,” the CNA said.

Chao Teng-hsiung, chairman of the Farglory Group, said he has instructed his firms to speed up the launch of housing projects in Taipei City's Neihu, and New Taipei City's Zhonghe and Xinzhuang in order to gain an upper hand in the market.

The worst time has been over with the coming four years offering great opportunities for economic improvements, he said.

The Farglory chairman said that a boom in the property market will increase employment in its related supply chain.

He explained that for every NT$1 invested in the property market, it will create NT$4.5 in business opportunities for its related sectors, which will in turn offer job openings of one million.

Chung Jung-chang, chairman of Huaku Development, said his company has set a five-year plan for launching housing projects worth a total of NT$60 billion in Taiwan, according to CNA.

Huaku also has plans to launch one housing project in Chengdu in China's Sichuan Province each year in the next five years, he said.

Chung said the business sector is longing for a cross-strait investment protection agreement, which he said will be a major advantage for the mid- to long-term development of Taiwan's economy.

A good economy will lead to a boom to the property market, he added.

Lai Cheng-yi, chairman of the Shining Group, expects the market to return to fundamentals and benefit from the stable cross-strait development that will introduce investments and demand from China, the CNA reported.

The property market is now going up from its lows, and it is time for major developers to charge ahead, he said.

Lai said the government is looking to achieve a stable economic growth of 4 percent this year, which will need the help of a healthy development of the property market.

He urged the government to allow China-based business to set up offices in Taiwan as soon as possible.

It will be a first step leading to subsequent demand for bigger offices, employees' dormitories and accommodations for executives from Chinese firms, he said.

Property speculators from China are not welcome, but proper investments should be allowed, he said.

He said the biggest opportunities for the local property market are coming from the government policy that continues to liberalize cross-strait trade.

Signing a cross-strait investment protection pact would boost Taiwan's property market, he added.

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