Home prices dropped 5.8 percent in Taipei last quarter from a year earlier, but have shown signs of stabilization elsewhere, real-estate brokers said in a report last week.
The housing price index compiled by Sinyi Realty Inc (信義房屋) stood at 269.52 in Taipei in the July-to-September period, a decrease of 5.8 percent from the same period last year.
“Unaffordable prices and increases in holding costs made Taipei the hardest-hit area as the correction cycle persists,” Sinyi researcher Tseng Chin-der (曾進德) said in the report.
Land taxes for home owners in Taipei picked up 30 percent this year, faster than in other parts of Taiwan, as housing authorities seek to narrow the gap between actual property rates and government-assessed worth for tax purposes.
Houses worth NT$70 million (US$2.22 million) or more in Taipei have to pay luxury home taxes to the city government and can only secure mortgages of up to 60 percent of the property’s value.
The credit restriction and holding cost hikes have driven out property investors, analysts said.
Property transactions fell 20.9 percent year-on-year to 1,773 deals in Taipei last month and dropped 3.6 percent to 3,724 units in New Taipei City, according to the latest government data.
Meanwhile, the Ministry of the Interior and the Ministry of Finance have indicated plans to scrap the government assessment mechanism and replace it with actual transaction prices for tax purposes.
The proposed change is expected to drastically raise holding and transaction costs, as government values tend to be much lower than market prices.
The Sinyi report showed that price corrections appeared to have stabilized in other parts of the country, with the price index gaining 0.6 percent in New Taipei City, and shedding 0.5 percent in Taichung and 0.2 percent in Kaohsiung.
Compared with three months earlier, house prices edged up in Taichung and Kaohsiung, which indicates stabilization, Tseng said.
Andy Huang (黃舒衛), a deputy director of REPro Knight Frank’s research department, said the worst was likely over, but the market would remain sluggish.
“Sellers appear reluctant to make greater concessions, as the economy is improving and the government has quit efforts to cool transactions,” Huang said.
The government’s latest transaction data lent support to the stabilization theory.
Trading volume rose 9 percent to 2,603 units in Kaohsiung last month from a year earlier, while volume rose 5.2 percent to 2,971 units in Taichung, official data showed.
Transactions rose 13.5 percent to 3,149 deals in Taoyuan, buoyed by finished work on presale projects, the data showed.
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