Taiwan’s real-estate sector, which has experienced seven consecutive bullish years since the SARS epidemic in 2004, will come under increased pressure for a price correction next year after the legislature passed tough transaction disclosure rules a day earlier, analysts said yesterday.
The newly adopted legislation could facilitate a real-estate price correction of between 10 percent and 15 percent because it curtails room for developers and brokers to manipulate real-estate prices without the support of objective data, said Jhally Chiu, head of the research department at Taiwan Realty Co (台灣房屋).
“The reform will put more pressure on sellers to lower prices as the market has yet to recoup [some of the lost momentum] from [implementation of] the luxury tax [in June],” Chiu told a media briefing.
“Global economic uncertainties and the presidential election next month are deepening the cautious sentiment,” Chiu said.
The package of new rules requires that buyers, real-estate brokers and land administration agents register actual transaction prices with authorities within 30 days of a purchase, while imposing fines on violators and dishonest filings.
The measure is intended to better protect buyers, who are disadvantaged because of misleading market information when bargaining for a lower price with land developers or construction firms.
“The requirement will make housing transactions more transparent, limiting room for price hikes driven by advertisement hype,” Chiu said.
Taiwan Realty chief executive Kevin Peng (彭培業) expects real estate in recently rezoned districts of New Taipei City (新北市) to be more vulnerable to price corrections than real estate in downtown Taipei.
New Taipei City had a total of 1.47 million real-estate units at the end of the second quarter, exceeding the number of households in the municipality by 58,500 units, Peng said, citing government data.
The supply-to-demand ratio remained negative in Taipei, suggesting that real-estate prices would remain stable in the capital, especially in popular locations, he said.
Jeffrey Huang (黃增福), an assistant manager at Evertrust Rehouse Co (永慶房仲集團), said real-estate prices might drop by between 10 percent and 20 percent next year after the government demonstrated resolve at reining in the nation’s runaway prices.
“Sellers who refuse to concede to the pressure of the luxury tax may show more flexibility,” Huang said by telephone. “The market is likely to become more sluggish next year than this year given the unfavorable macroenvironment.”
Many potential buyers may prefer to wait until after the presidential election on Jan. 14, Huang said.
Calvin Lin (林左裕), a professor of land economics at National Chengchi University, said the chances of real-estate price hikes plunged to 17.6 percent in Taipei in the coming three months, from 45.8 percent forecast earlier, based on the university’s poll.
However, the chances of price hikes for houses in New Taipei City increased to 52.5 percent from 32 percent, as more people have begun settling there because real-estate costs have grown increasingly unbearable in the capital, Lin said.
Overall, there is a downward trend nationwide, with prices in central and southern Taiwan likely to feel the pinch in the first quarter, Lin said.