Property sales climb due to government tax break

"Many home buyers are seeking to take advantage of the last tax discount opportunity."

Wu Quei-shen, associate manager of Pacific Rehouse

Existing property sales are on the rise as people come out of SARS hibernation to take advantage of low-interest loans and the government's incremental land-value tax break, market watchers said yesterday.

"Our home sales went up by 15 percent in the first two weeks [of this month]," said Wu Quei-shen (吳癸森), associate manager of real estate agency Pacific Rehouse (太平洋房屋).

As the lethal virus came under control late last month, more people are checking out existing properties, tempted by low interest rates as well as cuts in incremental land-value tax, Wu said.

Another real estate brokerage company said the market is recovering from the SARS blues.

"Compared to [last month], our sales have surged by 20 percent [this month] so far," said Victor Chang (張欣民), associate manager of Sinyi Real Estate Inc (信義房屋).

Chang that low interest loans, low down payments and the tax break contributed to the rise, adding that increasing demand from newlyweds will concentrate in this month and next, and will also help aggregate sales.

The government halved the incremental land-value tax, a capital gains tax on property transactions, to revive the real estate market.

The measure took effect early last year and will expire next February.

The government is mulling proposals to permanently lower the tax by an average of 20 percent from next February.

"From a long-term perspective, the measure is good news for the real estate market, but it will negate the effect of the previous incentive as people won't rush to buy property now," Chang said.

But the Pacific Rehouse official disagreed, saying there is still money to be made in the short term.

"Many home buyers are seeking to take advantage of the last tax discount opportunity," Wu said.

"The effect will be more significant when the expiration date draws near," Wu said.

While real estate sales have improved, commercial properties are still languishing in the doldrums in terms of sales and prices.

"There is no significant bounce-back in commercial buildings sales," said Hsu I-hsiang (許依祥), director of Brokerage service at CB Richard Ellis.

A Chinese-language newspaper yesterday reported that many companies are buying their own offices due to low interest rates instead of paying monthly rent, but Hsu said those are companies that already had purchasing plans.

Another real estate agency said business is stable, but noted that property prices are not picking up.

"In view of the slow economy and high unemployment rate, I think it will take a while for property prices to go up," said Wendy Hsueh (薛惠珍), director of the Research & Consultancy Department of DTZ Debenham Tie Leung International Property Advisers (戴德梁行).