Home prices are likely to see more corrections next quarter as transactions stall, with buyers hesitating to enter the market amid political and policy uncertainty, a quarterly survey by Evertrust Rehouse Co (永慶房屋) showed yesterday.
More than a majority of the respondents, or 52 percent, expect housing prices to fall in the coming year, the highest showing in 13 quarters, while just 28 percent believe it is wise to buy, the survey found.
The figures suggest an increasingly grim sentiment moving forward due to prevailing expectations of a transfer of governmental power in the presidential election in January next year, even though the proposed property taxes are much more lenient than expected.
“The property tax remains a threat, as different camps might sound tough on the matter on the campaign trail,” Evertrust general manager Yeh Ling-chi (葉凌棋) said.
Harsh rhetoric is sufficient to weigh on the market, whether politicians realize it or not, Yeh said.
Evertrust, the nation’s largest broker by number of offices, forecast existing home prices would drop by 5 to 10 percent in central locations and by 10 percent to 15 percent in suburb districts.
Housing prices have already edged down 5 percent in Taipei this quarter, compared with their peaks in the first half of last year, according to the survey.
More sellers are willing to lower their asking prices, but buyers demand bigger adjustments, Yeh said.
As a result, property deals decreased by 13.8 percent in the first two months of this year in the six special municipalities, with transactions in Taipei slumping to a 17-year low, Evertrust said, citing government statistics.
Luxury home sales, the main target of selective credit controls and holding tax hikes, suffered the most, with transactions shrinking more than 30 percent across the nation, the survey indicated.
The broker defines luxury homes as residential properties valued at more than NT$70 million (US$2.22 million) in Taipei, NT$50 million in New Taipei City and NT$40 million elsewhere.
While interest rates might stay low for an extended period of time, loans for luxury homes have a 50 percent approval rate, making them unpopular, Yeh said, adding that the credit tightening also applies to land purchases and will limit the supply of new housing in the future.
Increasing holding taxes on luxury homes are particularly worrying, as local governments continue to raise their assessed value in a gradual, but steady, fashion, Yeh said.
The Ministry of Finance doled out another punishment by subjecting owners of luxury homes to income taxes of 15 percent, starting this year, if sellers are unable to produce evidence to deny capital gains, Yeh said.
Overall transactions might flatten or stage a small rebound if price adjustments widen fast enough, Evertrust said.
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