Property stocks down on report of falling home prices in Taipei

Taipei, Dec. 27 (CNA) The property sector came under pressure Friday morning after the local media reported that residential property prices in Taipei had dropped in September, dealers said. The selling in local property stocks also reflected concerns over shrinking liquidity, especially after the U.S. Federal Reserve decided Dec. 18 to start scaling back its monthly bond buying program in January by US$10 billion, dealers said. In addition, investor sentiment has been dampened by speculations about a government plan to curb home prices so as to avoid an asset bubble, dealers said. As of 11: 32 a.m., the construction sub-index had fallen 0.17 percent to 311.14 points, underperforming the broader market, in which the weighted index had climbed 0.47 percent to 8,525.51 points. Among the falling property stocks, shares of King's Town Construction Co. had dropped 0.86 percent to NT$28.85 (US$0.96), while shares of Shining Building Business Co. had fallen 1.00 percent to NT$24.70. "The Taipei home price report has hurt investor confidence in the property sector, as many investors are worried that home buyers will be reluctant to chase prices," Asia Securities Investment Consultant analyst Chang Chih-cheng said. Citing Taipei City government data, the local media reported that the residential property index for September fell 0.27 percent from August, ending a six-month rising streak in home prices in the city. The steepest drop in home prices was in Daan, Xingyi and Zhongzheng districts, which fell more than 3 percent, followed by a 1.32 percent decline in Wanhua, Wenshan and Beitou districts, the data showed. But in Zhongshang, Nangang and Songshan districts, residential property prices increased 2.49 percent, while in Shilin, Neihu and Datong districts they remained steady, according to the data. "Since the Fed announced a scale back of its fund injections, concerns over property prices have been running deeper. The Taipei home price data dealt with another blow to investor sentiment this morning," Chang said. Finance Minister Chang Sheng-ford said Thursday in a session at the Legislative Yuan that the local property bull market is most likely ending due to a supply glut as property developers prepare to launch new projects. The government is studying the feasibility of imposing new taxes on speculators who hoard properties in a bid to reap gains from future transactions, he said. The central bank is expected to tighten financial inspections of banks, which are the major mortgage sources in Taiwan, and ask them to review their lending policies and tighten risk control. "Further measures to curb high home prices are what investors are most worried about at the moment," analyst Chang said. He said that since the Fed's announcement, the property sector has fallen below its 60-day moving average of around 319 points, becoming technically weaker. "If the construction sub-index fails to hold above the nearest technical support of around 306 points, further selling could follow," Chang said. (By Frances Huang)