Taiwan’s housing prices climbed higher in the first quarter, although the home loans to income ratio dropped slightly, suggesting that an impending luxury tax failed to trigger a price correction, an industry expert said yesterday.
The average price of housing transactions in the January-to-March period was NT$8.54 million (US$299,649), rising 6.8 percent from NT$8 million three months earlier, according to a survey by the Construction and Planning Agency.
That constituted 8.2 times the income of average households, from 8.9 times in the preceding quarter, the second-highest in the history of the survey, but it eased for the first time in three years on income improvement, the poll showed.
“The latest figures are disappointing because they show the luxury tax is ineffective in reining in housing prices,” said Chang Chin-oh (張金鶚), a land economics professor at National Chengchi University, which conducted the survey.
Starting this month, the government is imposing a tax of 10 to 15 percent of the transaction price of properties resold within one to two years of purchase in the hope of cooling the housing fever. The tax plan was made known in late February and sapped housing transactions by 30 percent in March and April.
Despite the cautious sentiment, 46 percent of the respondents expect home prices to rise further in the coming six months, outnumbering those with a bearish view at 37.6 percent, the survey indicated.
Chang attributed the trend to the government’s inconsistent attitude on the issue: introducing a luxury tax, while offering favorable mortgage terms for young homebuyers.
“The mixed messages left the market clueless on how to respond,” Chang said. “Housing prices may stage an aggressive comeback if the government fails to collect the luxury tax based on real transaction value.”
Currently, there are no rules requiring real-estate brokers to file transaction details and the government can only rely on taxpayers to report dealings honestly for tax purposes.
“It is odd that talks of the timing for home purchases, instead of price drops, have dominated the market lately,” Chang said. “The government can help reverse the direction by showing more resolution in carrying out the luxury tax.”
Housing prices in Taipei averaged NT$17.62 million in the first quarter, gaining 17.47 percent from NT$15 million three months earlier, the survey said.
The figures accounted for 13.2 times of household incomes in the capital, moderating from 14.3 times in the previous quarter, the survey said.
Mortgages took up 52 percent of homeowners’ income in Taipei, compared with 56 percent three months earlier, the survey said.
The burden, while easing a bit, remains far higher than the one-third threshold recommended by financial consultants.
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