Sat, Apr 19, 2014 - Page 14 News List

Tax rumors hit property shares

PRICE BUBBLE:According to reports, Taipei Deputy Mayor Chang Chin-oh is due to meet with Minister of Finance Chang Sheng-ford to discuss raising the housing tax

Staff writer, with CNA

Local property stocks underperformed the broader market yesterday, closing down amid fears that Taipei is developing new measures to curb constantly rising housing prices in the city, dealers said.

Selling was sparked by local media reports that the Taipei City Government is looking to raise the housing tax on residential properties not lived in by their owners in a bid to lessen speculation and dampen investors’ appetite for hoarding homes, they said.

The construction sub-index closed down 0.28 percent at 310.76, while the TAIEX closed 0.25 percent higher at 8,966.66.

Among the falling property stocks, shares of property developer Huaku Development Co (華固建設) shed 1.13 percent to close at NT$78.7, those of developer YeaShin International Development Co (亞昕國際開發) shed 1.51 percent to close at NT$22.8, while rival Howarm Construction Co’s (和旺建設) shares fell 1.12 percent to NT$26.5.

The property sector opened higher in line with the broader market, which hit 9,000 points at one point on bullish sentiment about the bellwether electronics sector.

“After the index hit 9,000 points, many investors became reluctant to chase prices to push the broader market higher,” Asia Securities Investment Consultant Co (亞洲投顧) analyst Chang Chih-cheng (張智誠) said, referring to the reduced turnover of NT$70.26 billion (US$2.33 billion) yesterday. “I have to say that technical resistance at 9,000 points remains strong.”

Selling also set in to drag down property stocks as investors were swayed by the news that Taipei could cap house prices.

According to local media reports, Taipei Deputy Mayor Chang Chin-oh (張金鶚) and Minister of Finance Chang Sheng-ford (張盛和) are scheduled to meet next week to discuss the issue.

The deputy mayor has long been seen as an advocate for reining in house prices to prevent a real-estate bubble and make the market healthier.

The two officials are reportedly likely to agree to raise the housing tax on unused properties to 2 percent from 1.2 percent, a move which could prompt investors to lower their property holdings.

Although the government introduced a luxury tax amid a series of measures to curb an increase in house prices, particularly in Taipei, prices have continued to rise, dealers said.

Dealers said as demand in Taipei remains strong, unless the city’s property market suffers a supply glut, the housing tax increase would likely be ineffective.

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