Tue, Mar 22, 2011 - Page 12 News List

Real-estate tax may cap gains: analysts

Bloomberg

Taiwan’s plan to impose a tax on home sales may cap seven years of gains after earlier measures failed to stop increases in housing prices climbing to a record level, Fubon Securities Co (富邦證券) and Polaris Securities Co (寶來證券) said.

Home prices in Taipei City may be unchanged this year, while those in the surrounding areas may fall as much as 5 percent from a year earlier, said Terry Liu at Fubon Securities and James Huang at Polaris Securities, both in Taipei.

Taiwan, Hong Kong, China and Singapore are struggling to ease speculation in their real-estate markets after home prices posted further gains in spite of measures including taxes and restrictions on second mortgages. The Cabinet this month approved a Ministry of Finance proposal on a 15 percent tax on residential properties sold within a year of purchase.

“A lot of speculators will want to dump their holdings before July, and as the time gets near, they will also lower prices,” Huang said. “The cost of mortgages remains low despite the expectations of further tightening this year.”

The proposed tax also includes a 10 percent levy on homes sold within two years.

The TAIEX Construction Index, which tracks 36 developers and construction companies, has lost 20 percent this year, the most among 28 industry measures on the benchmark index.

Home prices in Taipei rose 12.2 percent last year, Citigroup Inc analyst Dave Chiou (邱義昇) said.

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