The housing market might remain soft, but a hard landing is unlikely after the Ministry of the Interior on Tuesday promulgated complimentary measures to bans on transfers of presale housing purchase agreements, analysts said.
The ministry proposed the complimentary measures after the Legislative Yuan passed amendments to the Equalization of Land Rights Act (平均地權條例) in January, as it seeks to curb speculation in the presale property market and set heavy fines for market manipulation.
Luxury home sales would likely take a hit as the amendments require “private legal entities” — including private organizations and nonprofit groups — to obtain regulatory approval before buying real estate and bars them from reselling property within five years.
Photo: CNA
Meanwhile, a reward mechanism for whistle-blowers to report potential fraud or other illegal housing transactions would be created, the amendments say.
The bans and unfavorable regulations in the amendments have added pressure to the presale housing market, with transfers of presale contracts plunging to NT$85 billion (US$2.77 billion) in February from a monthly average of NT$180 billion in the final quarter of 2021, Sinyi Realty Inc (信義房屋) said.
The bans, which take effect 20 days after promulgation, would not limit purchases of presale houses to buyers with real demand, but short-term investors would likely exit the market, Sinyi research manager Tseng Ching-der (曾敬德) said in a statement on Tuesday.
Tseng said the bans would stretch resale deals, although they are not retroactive and would not affect existing purchase agreements.
The bans include exemptions for sellers with compelling reasons such as prolonged unemployment, critical illness, death and other major economic changes, he added.
Great Home Realty Co (大家房屋) head researcher Mandy Lang (郎美囡) agreed, saying the market has largely factored in the restrictions, with property transactions continuing to fall from the second half of last year.
However, H&B Realty Co (住商不動產) chief researcher Jessica Hsu (徐佳馨) voiced concern that cash-strained developers might exit the market after the amendments take effect, leaving presale house buyers at a loss.
Regarding the outlook for housing prices, Sinyi last week released a survey showing that up to 51 percent of the 1,150 respondents expected prices to fall this quarter, the highest percentage since the second quarter of 2020.
The survey conducted between March 15 and 22 found that 21 percent of respondents expected prices to rise this quarter, while 28 percent said prices would remain flat from last quarter.
However, a survey by Cathay Financial Holding Co (國泰金控) conducted from April 1 to 7 showed that 52 percent of the 14,489 respondents expected housing prices to continue to rise more than 3 percent over the next six months, despite several central bank interest rate increases since March last year.
Additional reporting by Kao Shih-ching
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