Major developers on Saturday expressed optimism over the property market in the second half of the year amid the fading impact of the luxury tax, which is aimed at curbing speculation in real-estate markets.
The developers said the property market has been on the road to recovery after construction companies started new projects in late March to stir up buying interest, expecting house prices to stabilize and transactions to increase.
The luxury tax went into effect in June 2011 with the aim of curbing speculation that was causing housing prices to skyrocket, in particular in the north of the country.
The levy mandates a 15 percent sales tax on second homes sold within one year of purchase and a 10 percent sales tax on properties sold one to two years after they were bought.
However, potential sellers who bought their property before June 2011 are exempt from the tax.
Transactions of residential and commercial housing in Taipei and New Taipei City (新北市), two of the major areas targeted by property developers, showed signs of a rebound last month, up 13 percent and 13.3 percent respectively, from April on reduced worries over the luxury tax.
Continental Development Corp (大陸建設) chairman Chang Liang-chi (張良吉) said that although the luxury tax kept many property investors from jumping into the market and dragged down transactions to some extent over the past two years, home prices in select areas in both cities remained stable.
Chang said the steady home prices reflected high land prices in these areas, adding that unless land prices take a beating, housing prices will not fall significantly.
Rich Development Inc (力麒建設) chairwoman Kuo Shu-chen (郭淑珍) said that while the government introduced measures to rein in home prices, Taiwan remains awash in liquidity as the central bank has kept interest rates low for a long time, which has helped to stabilize the local property market.
In the medium and long-term, Kuo said she has faith in the property market is recovery, in particular in the downtown areas of the Greater Taipei area and other metropolises, amid warming cross-strait business ties, which could lead to more inflows to Taiwan.
Kuo said she expects the prices of offices and shops, as well as luxury residential property, to continue to rise since many Chinese businesspeople are eager to gain foothold in Taiwan.
While being upbeat about the nation’s luxury homes, Huaku Development Co (華固建設) chairman Chung Long-chang (鍾榮昌) said he is also confident that sales of homes catering to the middle class will increase.
Highwealth Construction Corp (興富發建設) chairman Cheng Chin-tien (鄭欽天) said he has high hopes that housing prices in Greater Kaohsiung could make a strong comeback, as homes in the nation’s second-largest city are generally much cheaper than those in Taipei.