The housing market is likely to soften next quarter with price corrections more evident in areas with large supply as the Nov. 29 nine-in-one elections of local administrators draw nearer, dampening market confidence, a quarterly survey by Evertrust Rehouse Co (永慶房屋) showed.
Fifty-two percent of respondents expect housing prices to fall in the final quarter of the year, up 16 percentage points from three months earlier, despite the advent of the high season, the survey found.
The nation’s largest broker by the number of offices attributed the weak sentiment to political uncertainty and talks of extra tax burdens on capital gains from property transactions.
“Luxury homes may bear the brunt of proposed policy changes that may increase their tax burdens by up to 24 times,” Evertrust general manager Yeh Ling-chi (葉凌棋) said in a statement.
Tax burdens for upscale apartments have soared four times over the past few years, with transactions slowing virtually to a standstill after the central bank in June lowered their loan-to-value ratio to 50 percent, from 60 percent, Yeh said.
Evertrust said luxury home supply may surge before the Ministry of Finance introduces measures to levy capital gains tax based on real transaction prices, rather than much-lower government assessed values.
The new tax change is likely to take effect next year, allowing the government to show its commitment to tackling the increasing unaffordability of homes, which is the public’s top concern, Yeh said.
Housing supply in Taipei, New Taipei City, Hsinchu and Greater Tainan rose 20 percent for the first nine months from the same period last year, while supply in Taoyuan, Greater Taichung and Greater Kaohsiung rose 30 percent, Evertrust found.
Home prices in areas with heavy supply already showed mild corrections this quarter and the adjustments may deepen in the coming three months, Evertrust said.
Seventy percent of potential buyers indicated a willingness to enter the market if housing prices widen to 10 percent or more, according to the survey.
However, 58 percent of the sellers would not close deals unless buyers make offers higher than market rates and another 32 percent would insist on prices equivalent to market rates, the survey said.
“The inflexibility slows transactions, even though the improving economic conditions lend support to the market,” Evertrust researcher Andy Huang (黃舒衛) said.
Housing transactions are forecast to drop to 310,000 this year, down 16.4 percent from 371,000 last year, Huang said.
For the first eight months, home deals retreated 11.6 percent year-on-year to their lowest levels since the outbreak of SARS in 2003.
Buyers are advised against loose credit expansions as the central bank may start to raise interest rates after the US Federal Reserve ends its quantitative easing and tightens monetary policies, the survey said.
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