Presale and new home projects totaled NT$272.2 billion last quarter, down 30 percent from a year earlier, as builders and developers turned cautious and shied away from developing luxury houses, a survey by Cathay Real Estate Development Co (國泰建設) showed.
The figure represented a 32.3 percent increase when compared with three months earlier, due mainly to a shift from the low to high season, according to the survey carried out by National Chengchi University’s Taiwan Real Estate Research Center.
“Construction companies will refrain from introducing luxury home projects in the near term given the sharp increase in holding taxes,” Cathay Real Estate spokesman Lin Chin-liang (林清樑) told a media briefing.
While the tax increases remain bearable for wealthy home owners, many would stay on the sidelines until sentiment improves, Lin said.
The 30-day sales rate averaged 11 percent between April and last month, down 30.5 percent from the previous year, affirming a sluggish market, the survey said.
The sales rate was lowest in Kaohsiung at 8 percent, followed by Taoyuan and Hsinchu at 9 percent and Tainan at 10 percent, Takming University of Science and Technology professor Hua Ching-chun (花敬群) said.
The academic expects selling pressure to build up in those areas where property funds have migrated in recent years to take advantage of strengthened infrastructure facilities and housing demand on the back of relative affordability.
“The property chill has increasingly spread from Greater Taipei to Taoyuan and Taichung,” Hua said.
Taipei has come under the heaviest pressure for price corrections due to soaring prices and unfavorable taxes.
Taipei tax authorities have gradually, but steadily raised the value of houses and land in the capital, in a bid to close the gap between the government-assessed worth and market rates. Assessed values serve as the base for tax purposes.
However, presale and new home prices continued to consolidate at high levels, with downward revisions limited to isolated cases, National Chengchi University professor of land economics Chang Chin-oh (張金鶚) said.
Excessive liquidity and low interest rates lent support to prices, but construction companies cannot do without business for too long, Chang said.
“Price corrections are inevitable if developers seriously mean to digest their inventory,” Chang said.
Some firms have lowered prices by offering free furniture and decoration to facilitate sales, while others are providing low-interest loans or other financial aids, Chang said.
Cathay Real Estate said it would use less extravagant building materials to cut costs since there is little room for land or labor cost reductions.
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