Street-side store property prices may fall, halting three years of gains, because of higher interest rates and the new luxury tax, according to the nation’s biggest real-estate brokerage.
Prices of stores in metropolitan areas averaged NT$25.3 million (US$883,000) each in the first four months this year, 1.6 percent lower than the NT$25.7 million average price last year, according to data from Sinyi Realty Co (信義房屋).
The central bank raised borrowing costs for the fourth straight quarter in March to prevent inflation, with the discount rate on 10-day loans to banks reaching 1.75 percent.
The Cabinet said this month a new property and luxury tax will take effect from next month. A 15 percent levy will apply to commercial and residential investment properties sold within a year of purchase and 10 percent for those sold within two years, the Ministry of Finance said.
“Rising interest rates are curbing store prices,” Sinyi Realty chief analyst Stanley Su (蘇啟榮) said in a telephone interview on Thursday.
The rental yield for these properties averages about 2.5 percent and that return could lose its allure as interest rates increase, he said.
The government last month raised its inflation forecast to 2.18 percent for this year from 2 percent and increased the GDP growth forecast for the year to 5.04 percent from 4.92 percent.