Changes to the Equalization of Land Rights Act (平均地權條例) might trigger panic selling of presale house purchase agreements and weigh on overall property deals, real-estate analysts said yesterday.
The amendments, which cleared the legislature yesterday morning, would ban transfers of presale house purchase agreements and require legal entities to obtain permission from their respective governing authority before buying a residential unit.
Evertrust Rehouse Co (永慶房屋) said the legislation in essence limits presale housing projects to buyers with real demand and puts an end to people profiting from reselling purchase agreements that cost relatively little.
Photo: CNA
“The revisions aim to stem short-term property speculation for presale and existing housing, which would help make house prices in Taiwan more reasonable,” Evertrust Rehouse deputy research head Chen Chin-ping (陳金萍) said, adding that unaffordable housing has ranked the No. 1 public complaint over past few years, especially among young people.
Investment-minded holders of presale house contracts would opt out and take a loss if necessary, as some would not have the financial means to absorb the mortgage burdens, Evertrust Rehouse said.
The legislation should succeed in calming house price increase expectations and prevent a bubble from forming, the broker said.
Sinyi Realty Inc (信義房屋) said the requirement that legal entities gain approval before buying real estate would slow luxury house transactions and dampen capital repatriation.
Some people have channeled money from abroad to buy luxury houses in Taiwan to dodge stiff income taxes abroad, while others have used upscale housing to protect themselves from inflation, Sinyi said.
The amendments could discourage such practices, which noticeably cooled last year due to interest rate hikes, unfavorable tax terms and other headwinds, Sinyi said.
H&B Realty Co (住商不動產) said that the slowdown in the local housing market has to do with the amendments being proposed in July last year.
Investors have since fled the market, although they were hoping the government might back off, H&B research manager Jessica Hsu (徐佳馨) said.
“Panic selling looks inevitable and might cause a splash,” Hsu said.
However, it is too early to tell if there would be evident housing price corrections, she said.
Rather, the requirement to gain permission might discourage urban renewal projects, Hsu added.
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