Wed, Mar 11, 2015 - Page 13 News List

Housing deals plunge to 16-year low

TAX BURDEN?A survey found public support for the proposed property tax that analysts cite as the cause of plummeting housing sales, especially in Greater Taipei

By Crystal Hsu  /  Staff reporter

Housing market transactions dropped to a record low last month, as the Ministry of Finance is pressing ahead with plans to levy capital gains tax on property transactions, government data showed.

Housing deals totaled 12,009 units in the six special municipalities last month, slumping 20.9 percent from a year earlier and 37.5 percent from a month earlier, the lowest level since local governments launched surveys in 1999.

The figures showed the market has yet to bottom out, even though the proposed 17 percent flat tax on property gains is widely considered lenient when compared with the special sales levy that would subject homes sold within two years of purchase to a charge equaling 15 percent of their trading prices.

Transactions in Taipei fell to 1,851 last month, representing a contraction of 18 percent from a year earlier and 24.4 percent from January, municipal government statistics showed.

New Taipei City fared as badly, with transfers declining 28.3 percent year-on-year to 2,650 units, or a 42 percent retreat from the prior month, municipal statistics showed.

CAPITAL REGION

The showing came as little surprise, a researcher said.

Greater Taipei is likely to bear the brunt of the property tax since most homes elsewhere do not meet the taxable threshold of NT$40 million (US$1.26 million) or more, Evertrust Rehouse Co (永慶房屋) researcher Andy Huang (黃舒衛) said.

Homes sold at prices below the threshold are spared from the tax that is aimed at luxury homes and short-term real-estate speculation, Minister of Finance Chang Sheng-ford (張盛和) said last month.

Toward that end, the tax rate climbs to 30 percent for homes sold within two years of purchase or owned by foreigners, the minister said.

MINISTRY OF FINANCE

A recent poll by the ministry showed that 56.1 percent of the public supports the property tax being based on actual property trading prices, Chang said on Monday.

About 46 percent deem the taxation threshold reasonable and 31.2 percent endorse the flat tax design, the minister added.

The ministry called a meeting of academics, civic groups and developers on Monday afternoon with a view to defusing resistance to the tax plans.

Lai Cheng-yi (賴正鎰), chairman of Shining Construction Group (鄉林集團) and head of the General Chamber of Commerce (商業總會), has criticized the tax plan, saying that it would scare away foreign investors and slow the economy.

Home appliance companies, building materials suppliers and other firms will also suffer if the property market remains sluggish, Lai said.

Home transactions in Taoyuan stood at 2,007 units last month, slowing 19.2 percent from a year earlier and 38.8 percent from the prior month, local government figures showed.

Transfers shrank 28.8 percent annually to 1,974 units in Kaohsiung and tumbled 15 percent to 2,356 units in Taichung, the respective governments said. Tainan saw transactions slide 2.7 percent to 1,171 units last month.

The market will continue to wither until the tax plans settle, Evertrust said.

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