Housing transactions in the five special municipalities rose 9.1 percent sequentially to 18,804 units last month, but plummeted 21.4 percent from a year ago, government data released earlier this week showed.
Analysts said the launch of new homes rather than a rebound of existing home sales contributed to the monthly increase, while the sharp decline from a year ago likely reflected market reaction to government policies to curb rising housing prices.
“We expect the sluggish sentiment to last due to tighter credit controls and government policy risks, leading to slower sell-through and a moderate price correction in the second half of 2014,” UBS Securities analysts Ally Chen (陳玟瑾) and Camellia Cheng said yesterday in a client note.
Based on data compiled from the local governments’ Web sites, housing transactions in Taipei increased 15.9 percent month-on-month, but fell 18.9 percent year-on-year to 3,220 units, and those in New Taipei City increased 16.3 percent from April, but dropped 22.8 percent from a year ago to 6,004.
Sinyi Realty Inc (信義房屋), the nation’s only listed real-estate broker, said that transaction volumes in northern Taiwan would have been worse if not for the launch of new properties in Taipei’s Wanhua District (萬華) and New Taipei City’s Sinjhuang City (新莊), Banciao City (板橋) and Tamsui Township (淡水).
Newly built homes in Greater Kaohsiung’s Fongshan District (鳳山) and Zuoying District (左營) also pushed up transactions by 10.6 percent to 3,703 units last month compared with April, but were down 22.9 percent from a year ago.
In Greater Taichung, housing transactions fell 1.5 percent month-on-month and 21.7 percent year-on-year to 3,963 last month, while those in Greater Tainan dropped 1.1 percent from the previous month and 17.4 percent from a year ago to 1,914.
UBS said the latest data showed that the property market in Taiwan remained lukewarm, with transaction volumes staying low and prices continuing to consolidate in Taipei and New Taipei City, as many property investors remain cautious amid rising policy risks.
Last month, the Legislative Yuan passed a bill to raise the tax rate for non-owner-occupied residential properties to between 1.5 percent and 3.6 percent, from the current tax range of between 1.2 percent and 2 percent.
In addition, the national tax bureau is stepping up reviews of high-value property transactions and individuals who own multiple properties as it tightens up inspections of pre-sale housing transactions, according to local media reports.
Transaction volumes might also be affected by several state-owned banks’ recent moves to lower their loan-to-value ratio to 70 percent from 80 percent for first-time home buyers, UBS analysts said.
Loan policies for people who own two or more houses are even tighter, at only 50 to 60 percent of the property’s value, with no grace period for principal payments for the first two years, the analysts said.
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