Mon, Mar 03, 2014 - Page 13 News List

Property transactions dip on planned tax increase

DRIVEN TO SIDELINES:Real-estate firms posted drops as steep as 25 percent month-on-month, as buyers wait to see how the higher income tax pans out, agents said

By Crystal Hsu  /  Staff reporter

Major housing brokers saw their transactions soften last month from January, as low temperatures and the government’s planned tax increases drove buyers to the sidelines, while holiday disruptions continued to weigh.

Home deals weakened by low-single digits to 25 percent in different across the nation, as prospective buyers opted to stay put until the market can better assimilate the Ministry of Finance’s plans to raise taxes on high earners, analysts said.

H&B Realty Co (住商不動產), the nation’s largest by number of franchises, reported a 25 percent drop in home sales nationwide last month, compared with one month earlier, company spokeswoman Jessica Hsu (徐佳馨) said by telephone.

Home deals dropped 20 percent in Greater Taipei last month, 25 percent in Greater Taichung and 20 percent in Greater Kaohsiung, the spokeswoman said.

While unsurprised at the slump last month, given that February is the shortest month, the spokeswoman voiced unease at the absence of sales of high-end property.

“The inaction on the part of wealthy home owners and investors shows they take tax hike plans seriously,” Hsu said, adding that a crackdown on capital gains tax evasion further chilled the market.

The finance ministry has been stepping up tax inspections on property deals valued at more than NT$80 million (US$2.64 million) in Taipei and more than NT$50 million elsewhere.

Hsu expects the situation to improve this month when the market for existing housing may benefit from the spring sales season, starting later this month and lasting through to next month.

Taiwan Realty Co (台灣房屋) said transactions weakened an average of 9.48 percent in major municipalities last month, with the decline standing at 11.98 percent and 11.02 percent in Taipei and New Taipei City respectively.

The decline came as little surprise, since high-end homes are mostly concentrated in Greater Taipei, the broker said.

“Prospective buyers concluded it is better to wait and see how the tax hikes pan out,” driving more property funds southward, Taiwan Realty spokeswoman Charlene Chang (張旭嵐) said.

Evertrust Rehouse Co (永慶房屋), the nation’s largest realty company by number of offices, saw transactions fall between 18 percent and 2 percent in different areas last month, dragged by cold weather and unfavorable policy directions.

Home sales dipped 2 percent in Taipei last month, but tumbled 15 percent in New Taipei City, 18 percent in Greater Taichung and 9 percent in Greater Kaohsiung, Evertrust said in a statement.

However, the broker took comfort in the 10 percent increase in potential buyers for the second half of last month and attributed the trend to a likely recovery this month.

Asset allocations accounted for 40 percent of transactions in downtown Taipei, while relocation needs slowed to 25 percent, the broker said.

First-time home ownership rose to 22 percent last month and may continue to sustain the market going forward, Evertrust said.

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