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TIER urges caution for 6 months in the housing market
Taiwan News, Staff Writer
2014-05-26 05:11 PM
Affected by government policies designed to rein in housing prices, the outlook of the construction industry remains conservative and pessimistic. The construction industry not only continued a four month slide in the “Index of Business Climate” published by the Taiwan Institute of Economic Research (TIER) Monday, it was its biggest drop since October 2011. TIER forecasts that the domestic real estate market will “shrink” this year with a significant fall in prices next year. Thus, caution should be exercised in the housing market in the next six months.

The “Index of Business Climate” investigates the monthly and six month economic outlook of the manufacturing, service, and construction industries. The “Index of Business Climate” for the aforementioned industries exhibited a rare “simultaneous drop,” signaling a high degree of uncertainty in the domestic economy. Of the three industries, construction fell the most, dropping 6.32 points from 89.35 points in March to 83.03 points in April.

Director of TIER’s macroeconomic forecasting center Gordon Sun stated that government regulation of the housing market in April coupled with ongoing monthly reduction in the scale of debt purchases by the U.S. Federal Reserve caused capital to gradually flow into securities. A wait and see attitude in the domestic housing market and weakness in construction companies’ civil engineering business caused this month’s economic downturn.

Looking to the future, Sun believes that the housing market should be met with care in the next six months due to growing government intervention, more stringent attempts to prevent tax loopholes on the part of the National Treasury Bureau, short-term turbulence in Taiwan’s political and economic situation, and a tightening of lending in state-held banks.

After the end of the May tax season, the Ministry of Finance will conduct tax audits of landlords beginning with taxpayers holding the most properties, said the Deputy Finance Minister Wu Tang-chieh at the Legislative Finance Committee Monday.

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