The presale housing market slipped into a recessionary state last month, as developers and contractors refrained from launching new projects to ease selling pressure, a report by the Chinese-language Housing Monthly showed.

The business climate for the presale housing market further deteriorated and flashed “blue” last month, after four months of “yellow-blue,” as fewer presale or new homes entered the market, the report found.

“The retreat reflected a downturn in confidence on the part of builders and developers, dragged by inflexible pricing and sluggish sales,” Housing Monthly research manager Ho Shih-chang (何世昌) said by telephone.

Presale projects dropped to about NT$20 billion (US$660 million) in northern Taiwan last month, shrinking 50 percent from NT$40 billion in June, depressing the business climate by 2.3 points to 30.2, the survey found.

Only three presale projects drew sales of more than NT$1.5 billion in the Greater Taipei area, according to the survey, meaning most were minor projects.

The advent of the Lunar Ghost Month, which falls on Aug. 22 to Sept. 19 this year, dampened confidence, Ho said, as Taiwanese tend to avoid big purchases during this period.

About 400 units of new homes entered the market last month, down 50 percent from one month earlier, as some developers would rather hold on to their inventory than make price concessions to facilitate sales, Ho said.

Improving sales in the existing home market led developers and builders to raise asking prices, Ho said.

Several projects in Neihu (內湖), Nangang (南港) and Wenshan (文山) districts cost more than NT$1 million per ping (3.31m2), higher than the height of the property boom, Ho added.

The gauge on price concessions came in at 4.78 last month, up from 4.44 percent, meaning the supply side was less flexible, Ho said.

High land acquisition and material costs contributed to the pricing strategy, he said.

Property advertisements picked up 8 percent because there were five weekends last month, compared with four in the preceding month, the report said.

Buying interest — as measured by the number of visits to construction sites — held steady, while sales softened.

“It is hard to tell where the market is headed, but the landscape might remain tough this month and next month,” Ho said.

Government statistics confirmed the downward trend.

The number of new constructions totaled 32,000 units nationwide in the first six months of the year, down 11.11 percent from the same period last year, according to the Ministry of the Interior data.

That is the lowest level in seven years, as builders and developers concentrate on adjusting inventory, Sinyi Realty Inc (信義房屋) research manager Tseng Ching-der (曾敬德) said.

Taichung ranks first place with 6,341 new units, overtaking New Taipei City and other municipalities, as property funds flew to central Taiwan, Tseng said.

Taipei reported only 1,553 units of new constructions due to unaffordability and limited land supply, Tseng said.