Home prices in major metropolitan areas grew by double-digit percentages for the past two years as the impact of a special sales levy dulled. However, the levy continues to weigh on transactions in the Greater Taipei area, property analysts said.
Housing prices in metropolitan areas rose between 10 percent and 19 percent in the past two years, while trading volume in areas outside Greater Taipei recovered to the levels before the imposition of the sales levy, also known as the luxury tax, Sinyi Realty Inc (信義房屋) said in a report.
The levy subjects houses sold within two years of purchase to taxes of 10 percent to 15 percent and aimed to cool the property market and induce a price correction.
‘LOSING ITS TEETH’
“The tax, which chilled transactions in the first year, appears to have lost its teeth as it is turns two years old,” Sinyi Realty researcher Tseng Chin-der (曾敬德) said.
The past two years saw home prices in Taipei advance 9 percent, almost catching up with the 10 percent pace increase prior to the introduction of the tax in June 2011, Tseng said.
In New Taipei City (新北市), home prices gained 8 percent in the past two years, compared with a 14 percent increase before the tax, the report found.
A stable job market, low interest rates and capital excess lend support to property prices as real-estate is consistently cited as a favorite investment of Taiwanese, Tseng said.
However, transactions remain weak in Greater Taipei, falling by 30 percent from the pre-tax levels, as property funds are flowing southward, the report said.
Housing prices in Taoyuan picked up 16 percent in the last two years, faster than a 15 percent increase before the tax, while transactions recovered to the pre-tax volume, the report said.
Housing prices accelerated 12 percent and 17 percent in Greater Taichung and Greater Tainan respectively, compared with a 10 percent increase and a 5 percent decline before the luxury tax, the report showed.
The past two years also witnessed home costs in Greater Kaohsiung rising 11 percent in the last two years, significantly less than an advancement of 19 percent before the tax, the report said, adding that trading volume in central and southern areas appeared unaffected by the levy.
Housing Monthly, a property magazine focusing on the presale and new home market, said housing prices increased by 20 percent in Greater Taipei, thanks to investment needs and global quantitative easing that drove some funds to the property sector.
The pace of growth hit more than 50 percent in districts where the government is constructing new infrastructure, the magazine said.
Ample liquidity weakens the impact of the tax as most sellers hold onto properties rather than impact prices to facilitate sales, the magazine said.
“The luxury tax will further lose its impact as time goes by,” Housing Monthly spokesman Ni Tze-jen (倪子仁) said.