Turbulence on the stock market has dampened interest in the property market as major real-estate brokers have seen the number of prospective buyers fall by more than 10 percent in the past three weeks.
Growing uncertainty over the economy at home and abroad cast another shadow over a housing market that has also been hit by a recent luxury tax as investors have pulled out.
Sinyi Realty Co (信義房屋), the nation’s only listed real-estate broker, saw the number of prospective buyers fall 10 percent this month, while the benchmark TAIEX shed 12.66 percent as fears grew of a double-dip global recession.
“The [TAIEX’s] wild swings prompted people to reassess their wealth and their portfolios,” Sinyi’s head researcher Stanley Su (蘇啟榮) said by telephone.
The cautious sentiment appeared at a time when the market has yet to recover from the implementation of the luxury tax, Su said.
The levy, which subjects houses resold within two years of purchase to taxes of between 10 percent and 15 percent, led to housing transactions falling by 20 percent in Taipei last month, compared with the previous month, according to city government statistics.
The number of property transfers last month stood at 3,618, the second lowest level this year after February, when the Lunar New Year shortened the number of working days, and it was close to the levels seen during the global financial crisis in 2008 and 2009.
Trading was less affected outside the Greater Taipei area and Su attributed the gap to inflexible real estate prices in Taipei and New Taipei City (新北市).
“Sellers remain unwilling to lower asking prices, thanks to an excess of liquidity and low interest rates,” Su said.
Jessica Hsu (徐佳馨), head of research at H&B Realty (住商不動產), the nation’s largest real-estate broker by number of franchises, said people looking for homes had declined 15 percent in the past three weeks, while luxury housing transactions had come to a standstill.
Houses priced NT$60 million (US$2.07 million) or more bore the brunt of the correction as potential buyers have probably incurred heavy financial losses on the stock market, Hsu said, adding that most prospective buyers for luxury homes have exposure to global equities and bonds.
The local bourse shrank by NT$762.8 billion in market value last week, Taiwan Stock Exchange data showed, while global equity market losses have amounted to US$8.6 trillion in the past four weeks, online news outlet Cnyes.com reported yesterday.
“Clients with assets in US dollars must have sustained considerable losses of late,” Hsu said by telephone. “The ongoing turmoil warrants asset relocation plans and many investors would like to increase their cash positions before the global picture becomes clearer.”
H&B has yet to spot prices falling despite dwindling transactions, while the price gap with the rest of the country has widened to 30 percent for homes in Taipei and 20 percent in New Taipei City (新北市), Hsu said.
Evertrust Rehouse Co (永慶房屋), the nation’s largest broker by number of outlets, including franchises and directly-owned branches, reported a decline of 15 percent in the number of prospective buyers in the past three weeks.
Evertrust associate manager Jeffery Huang (黃增福) said the uncertain global economic outlook was rubbing salt into the housing market’s wounds and they may need more time to recover.
“While inflationary pressures tend to boost real-estate prices, economic uncertainties do the opposite,” Huang said.