Just 35.26 percent of Taiwanese plan to buy homes in the second half of the year, down from 57.9 percent in the same period last year, as prospective buyers remain cautious even though concerns about government policy uncertainty has ebbed, a survey by Taiwan Realty Co (台灣房屋) showed yesterday.
The finding suggests a sustained sluggish housing market going forward, despite the passage of a new property tax law that combines separate taxes on actual gains from land and residence transactions that goes into effect in January next year.
Home sellers now pay separate property and real-estate taxes based on government-assessed transaction values, which trend to be much lower than market prices.
Cheaper property taxes are also blamed for encouraging property speculation that has pushed housing prices to unreasonably high levels nationwide, particularly in Greater Taipei.
“The new income tax on property gains will rewrite the history of the housing market, as 63.64 percent of prospective buyers plan to take action before it goes into practice,” Taiwan Realty spokeswoman Charlene Chang (張旭嵐) said.
Chang attributed the trend to lower tax burdens under existing rules that would continue to apply for houses acquired before the end of this year.
Under current tax rules, housing taxes will shrink due to depreciation.
The new property taxes would impose income taxes from 15 to 45 percent on gains from transactions based on actual trading prices, depending on the length of the holding period.
However, 83.58 percent of respondents have vague knowledge of the new property tax and 10.14 percent did not know anything about it, the survey found.
A minor 6.28 percent said they have full understanding of the new levy, the survey added.
Almost half — 45.9 percent — said they doubt the new tax can effectively effect housing prices that remain too high, the survey found.
The market would need more time to assimilate the new tax, since it has yet to take effect, Chang said.
Political uncertainty associated with the presidential and legislative elections in January next year deepened the conservative sentiment, the survey said.
Housing transactions contracted by 16 percent in 2000 on prevalent expectations of a change of political power, Taiwan Realty said, adding that a central government transition might take place again next year.
Owners seeking to cut inventory are likely to enter the market before the campaigns heat up toward the end of the year, the broker said.
Selling pressure would widen space for price negotiation and buyers should take advantage and find bargains, Taiwan Realty said.
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