As consumer confidence in the housing market slumps to a record low, the economic slowdown may put a sizable number of real estate brokers out of work as a rebound in the property market is unlikely in the second half, if not impossible, pundits cautioned yesterday.
Lee Tung-rong (李同榮), chairman of the Taipei Association of Real Estate Brokers (台北市房仲公會), said there were about 5,000 real estate brokerage outlets nationwide and the number may drop to 4,000, given the falling number of deals in the first half and a drab outlook for the rest of the year.
For the first time in six years, the number of real estate transactions declined 9.1 percent to 195,700 deals in the first six months, compared with 210,374 a year ago, Lee said.
Lee said it is only a matter of time before some brokers exit the market, either of their own accord or because they are forced to.
“The thin trading makes downsizing and other cost-saving measures necessary for real estate agencies to cut their losses and stay afloat,” Lee told reporters.
On Tuesday, the Institute for Physical Planning and Information (國土規劃及不動產資訊中心) said confidence levels among prospective home buyers in Taipei dived to 65.79 points in the second quarter, the lowest since the institute started the survey in May 2003.
Billy Yen (顏炳立), general manager of DTZ Debenham Tie Leung International Property Advisers (戴德梁行), was also gloomy, saying the property market would still be overcrowded with 4,000 real estate brokerage outlets.
Yen said that it costs about NT$400,000 (US$12,700) a month to maintain an outlet, meaning each outlet needs to complete NT$100 million in deals.
“The goal is untenable for many outlets, with speculators opting to exit on thin profit margins and potential buyers expecting property prices to fall in the coming months,” Yen said by telephone.
The commercial property market was particularly bearish in the first half, with volume dropping 50 percent year-on-year on concerns over rising inflation and interest rates eroding profit margins, DTZ said in a report last month.
Lee and Yen agreed reckless expansion on the part of real estate agencies was also to blame for the overcrowding in the marketplace.
Lee noted that the number of brokerage outlets stood at 2,800 in 2002 and had nearly doubled as at the end of last year.
“The supply of brokers appears to have exceeded demand,” Lee said.
Yen echoed the observation, saying firms with liquidity pressures would opt out first.
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