The new home market indicator flashed “blue” last month, even though developers initiated more projects than in the same period last year, as buyers remained conservative and sellers refused to lower prices, the Chinese-language Housing Monthly (住展雜誌) magazine reported last week.
The reading is a retreat from the “yellow-blue” signal one month earlier, suggesting the market has yet to bottom out and might need more time to absorb the government’s proposed tax plans on property gains, the article said.
“The much anticipated ‘red-envelope rallies’ over the Lunar New Year holiday have not come to fruition this year,” Housing Monthly research manager Ho Shih-chang (何世昌) said.
Although January is typically a weak month, developers put NT$50 billion (US$1.58 billion) worth of presale projects or new homes on the market, an increase of 66 percent from the same period last year, the report said.
The surge had more to do with launches delayed by the nine-in-one elections in November last year. Over half of the properties are in New Taipei City, the report said. The increase in supply indicated confidence on the part of builders and developers last month, but buyers have failed to respond in kind, Ho said.
The subindex on transactions remained unchanged at 4.69 last month, while that for potential buyers stayed flat at 4.24, the report said. The price concession gauge held steady at 5.12, meaning that sellers are unwilling to lower prices amid sluggish sales, the report said.
Adequate funding and low borrowing costs allow builders and developers to be inflexible and many are braced for an extended period of weak sales, Ho said.
Property advertisements fell last month, as brokers began saving budgets for the spring sale season that begins late next month and runs through April, the report said.
“The inactivity is wise as the market needs time to digest the income tax plan proposed last week by the Ministry of Finance on property transaction gains,” Ho said.
The ministry called for a flat 17 percent income tax on houses sold for NT$40 million or more and a 30 percent levy on houses resold within two years of purchase if sellers cannot produce evidence of self-occupancy.
The 30 percent levy also applies to overseas investors if they do not own an office in Taiwan, the ministry said.
Brokers breathed a sigh of relief at the plan, as most homes in Taiwan cost less than NT$40 million.
In addition, sellers can file for full tax returns if they use the money to buy new property. The income tax plan needs approval from the legislature before it can go into practice next year.
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