The nation’s luxury housing market has come to a standstill, but housing prices in Taipei remain too high for young buyers, even if prices were to drop by 30 percent, a property analyst said yesterday.
International property consultancy firm DTZ (戴德梁行) general manager Billy Yen (顏炳立) painted the luxury home market as “terminally ill” amid unfavorable policy moves.
The housing market is on the brink of a downturn after more than a decade of boom, as evidenced by sluggish transactions in the first-tier districts of the Greater Taipei area, Yen said, adding that sales are cooling in second-tier districts and virtually freezing elsewhere.
“Upscale houses fare the worst, as there is little interest in properties worth NT$30 million [US$1 million] or more [due to tightened lending terms and taxation requirements],” Yen told a media briefing.
He defines luxury housing as homes carrying price tags of NT$1 million per ping (3.3m2) or more in central districts such as Daan (大安), Zhongzheng (中正), Xinyi (信 義), Songshan (松山) and Zhongshan (中山).
The central bank last month lowered the loan-to-value ratio from 60 percent to 50 percent on houses of NT$70 million or more in Taipei, NT$60 million in New Taipei City and NT$40 million in other parts of the nation.
The newest selective credit controls aim to curb transactions of expensive apartments where prices continue to climb despite unfavorable measures.
Meanwhile, the Ministry of Finance has repeatedly raised holding costs for houses in prime locations, saying they benefit most from strengthened infrastructure facilities.
Yen compared the joint effort by government agencies to strong laxatives that have weakened the housing market beyond repair in the foreseeable future.
Once a deal is closed, taxation officials would ensure all parties fulfilled their tax obligations, he said.
Houses sold within two years of purchase have to pay a special sales levy of up to 15 percent as well as capital gains taxes on any value increments.
Yen said visits by tax officials have scared away potential buyers, especially those with deep pockets, though real estate remains their favorite tool of asset allocation, he said.
Houses priced at NT$1.1 million per ping usually settled for NT$900,000 per ping, Yen said, doubting that the threshold can hold if trading continues to wither.
Knockoff luxury housing — those built with extravagant materials, but outside popular locations — may prove overpriced, Yen said.
Hong Kong’s richest businessman, Li Ka-shing (李嘉誠), who has properties across Greater China, has trimmed real-estate positions by more than NT$100 billion and Taiwanese counterparts may do the same to lower risks, he said.
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