Wed, Apr 04, 2012 - Page 12 News List

Home sales pick up, but recovery remains sluggish

NEW TAXES?Concern over the luxury tax seems to have subsided, but the government is considering new proposals, such as a levy on capital gains

By Crystal Hsu  /  Staff reporter

Home sales picked up significantly last month from a nine-year low in February, but remained light compared with a year ago, suggesting a sluggish recovery, government data showed yesterday.

The number of home transactions last month totaled 2,960 units in Taipei City and 3,392 units in Greater Kaohsiung, rising 22 percent and 65 percent respectively from February, data showed.

Despite the monthly improvement, the figures represented an annual decline of 47 percent in Taipei City and 21.74 percent in Greater Kaohsiung.

It is the first sign of recovery supported by government data after the introduction of a luxury tax last year started to weigh on the market, said Tseng Chin-der (曾敬德), a researcher at Sinyi Realty Inc (信義房屋), the nation’s only listed broker.

The levy, implemented on June 1 last year, subjects homes resold within two years of purchase to taxes of up to 15 percent of the transaction price.

FIRST-TIME BUYERS

Tseng attributed the pickup to softened expectations of a price fall as housing prices have been relatively stable thus far.

“In particular, first-time buyers decided to stop waiting” after seeing little change in housing prices, Tseng said by telephone.

Tseng expects home sales to recover further this month and beyond in a slow, but steady fashion.

A fast expansion this year to the pre-luxury tax level is unlikely, if not impossible, this year given the government’s pledge to continue efforts to promote social justice by addressing the issue of high property prices.

TRANSACTION VALUE

A task force led by the Ministry of Finance is studying the possibility of imposing a capital gains tax on property transactions or recommending that properties be taxed based on their transaction value instead of the much-lower government-assessed values, Tseng said.

The latter measure would further raise holding costs for homeowners after the introduction of the luxury tax.

Annual property taxes for 10,400 units in Taipei’s 400 “most expensive” buildings are expected to soar threefold or fourfold next month when they are due, a Taiwan Realty Co (台灣房屋) researcher said.

NEW FORMULA

The city government last year promulgated a new formula for calculating housing taxes that also factored in the type of building materials used, facilities and location.

Under the new formula, owners of a new upscale residential building in Taipei’s Dunhua S Road will pay the highest housing tax, followed by select buildings in Xinyi District (信義), Taiwan Realty head researcher Jhally Chiu said.

A building in Dazhi District (大直) will see its housing tax rise the fastest after the extension of the mass rapid transit system improved transport convenience, Chiu said.

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