The housing market is likely to remain sluggish next year after transactions dropped to an eight-year low this year on the back of unfavorable government policies and increased expectations of price decreases, a survey by Chinatrust Real Estate Co (中信房屋) found yesterday.
Home transfers totaled about 360,000 this year, the lowest level in eight years thanks to the introduction of a luxury tax that imposes a special tax of between 10 percent and 15 percent on properties resold within two years of purchase, Chinatrust Real Estate chairman Chris Cheng Yu (鄭余正全) told a media briefing.
The levy and a recently passed property transaction registration rule are intensifying the price differential between sellers and buyers, weakening transfers for the foreseeable future until the two sides find common ground, Cheng Yu said.
Legislation requires that buyers and real-estate brokers register property transaction details, including actual prices, online, limiting room for price manipulation by developers and brokers.
Global economic uncertainty lends further support to the wait-and-see attitude as 72 percent of respondents held bearish views on the domestic economy for the first quarter of next year, the survey showed.
“The cautious sentiment more than offset the penchant among Taiwanese to use real estate as an investment tool,” Cheng Yu said.
A total of 52.34 percent of respondents expressed an interest in making a home purchase this quarter, up from 50.19 percent three months earlier, in the absence of a major economic downturn, the survey found.
However, most prospective buyers fail to take action because of concerns that housing prices could fall next year after remaining relatively steady this year despite the luxury tax, Cheng Yu said.
Chinatrust Real Estate deputy general manager Richard Liu (劉天仁) said he expected a 10 percent fall in property prices nationwide next year as sellers strapped for cash start to cash in.
“The chance of a bigger correction is unlikely in light of excess liquidity and low borrowing costs,” Liu said.
However, the forecast correction might not apply to homes in the prime real-estate areas of Taipei, where demand remains solid, Liu said.
In addition, parts of New Taipei City (新北市) could see prices plummet because of excess supply.
About half of respondents expected concessions of up to 20 percent of the asking price, which bodes ill for future transactions, the survey indicated.
While anticipating a price correction, many were neutral on a possible link to the outcome of the presidential election on Jan. 14, the survey said.
Nearly 25 percent believed the election would have no impact at all, while another 22.3 percent thought the impact would be limited, the survey said, because both the Chinese Nationalist Party (KMT) and the Democratic Progressive Party have pledged to introduce measures to rein in soaring property prices.