Consumer confidence dropped further this month, weakening for eight consecutive months, dragged by negative buying sentiment toward durable goods, as major economic data flounder, a survey by National Central University showed yesterday.
The consumer confidence index came in at 81.61 this month, the lowest since March last year’s reading of 80.96, reflecting a general pessimism among the public, Dachrahn Wu (吳大任), a professor at the university’s Research Center for Taiwan Economic Development, told a media briefing.
The finding raises uncertainty for private consumption going forward, even though it tends to increase over the Lunar New Year, bolstered by year-end bonuses, Wu said.
“Companies may adopt a more conservative policy this time as a global slowdown has dented their earnings for most parts of this year,” Wu said.
The Lunar New Year falls on Feb. 8 next year.
The sub-index on durable goods purchases reported the steepest slump, down 6.9 points to 94.65, falling below the neutral mark of 100 for the first time in 26 months, the survey found.
Wu pinned the blame squarely on a new property tax that would subject capital gains from property transactions to income taxes of 10 to 45 percent depending on the length of holding period.
The new levy, which takes effect next month, will squeeze room for taking profits on real-estate investments and foster a protracted price correction, the economist said.
“A price correction of 30 percent may endanger the stability of the nation’s banking system, turning it into a huge challenge for the next president,” Wu said.
Housing transactions are expected to hover at about 260,000 units this year, the lightest since the technology bubble bust in 2001, different brokers estimate.
Chu Yun-peng (朱雲鵬), another economics professor, projected that the correction might persist for three to eight years, ending a 12-year bullish market.
Soaring housing prices, especially in Greater Taipei, will prove unsustainable, Chu said, adding that housing affordability data show that it would take 13 to 16 years for Taipei and New Taipei City residents to own a home.
The sub-index on stock investments declined to 70.4, the weakest since November 2013, reflecting bleak views about the nation’s growth prospects, economics professor Yau Ruey (姚睿) said.
Poor economic data indicated no reason for a sentiment reversal in the foreseeable future, Yau said.
However, the sub-index on the job market advanced 0.95 points to 113.15, lending support to household income and private consumption as a whole, the survey showed.
The survey questioned 2,437 Taiwanese adults by telephone between Dec. 19 and Dec. 23 with a margin of error of 2 percent.
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