The nation’s luxury housing market remains lackluster as high holding taxes, credit controls and expectations of further price falls scare away buyers, Taiwan Realty Co (台灣房屋) said yesterday.
The first four months of this year saw only three transactions of luxury houses that cost more than NT$1.5 million (US$46,263) per ping (3.3m2), down from 16 deals during the same period last year, the broker said, citing government data.
That compares with 14 in 2014 and 12 in 2013, when upscale housing started to grow unpopular amid unfavorable policy measures.
“The chilling trend is unlikely to reverse as the central bank retains its mortgage restrictions on luxury homes,” Taiwan Realty said in a report.
The central bank in March lifted credit controls that limited mortgage loans to 60 percent of the assessed value of houses in Taipei and 15 popular districts in New Taipei City.
The relaxation also applied to multiple-home mortgages, but does not extend to luxury homes nationwide — defined as houses valued at NT$70 million or more in Taipei, NT$60 million in New Taipei City and NT$40 million elsewhere.
Central bank Governor Perng Fai-nan (彭淮南) said loan concentration involving luxury homes remains an issue with some lenders.
This means luxury home buyers have to pay 40 percent of the house price up front, making deals more untenable, the broker said.
Average mortgages stand at 70 percent of home prices in Taiwan.
Expectations of price falls and expensive holding taxes have facilitated the demise of the luxury-home market, Taiwan Realty said.
Most luxury-home owners would rather stay put than lower prices beyond acceptable limits, and low interest rates make it easier to do so, the broker said.
Buyers tend to demand an extra 10 percent discount from what sellers are willing to concede, impeding transactions, it said.
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