‘Luxury Tax' Beginning to Cool Down Realty Market

Taipei, March 9, 2011 (CENS)--The “luxury tax” against realty speculation has begun to manifest its effect, leading to the abortion or withdrawal of at least 10 major realty bidding projects up to now, worth over NT$3 billion in value.

The court-sponsored auction for the third and fourth floors of Ta Ya Department Store, near Taipei Railway Station, for instance, was aborted yesterday (March 8), as no one bid met the floor price level. Another court-sponsored auction for a luxury housing unit near the National Palace Museum was postponed. DTZ Taiwan has canceled public bidding for five realty objects, originally scheduled today (March 8), altogether.

Chang Tse-fang, vice general manager of LHouse, a realty portal site, reported that the proposed “luxury tax” policy has frozen the court-sponsored realty auction market, as only eight out of 53 realty objects on the block with floor price exceeding NT$20 million have been successfully sold since then. Only investors with deep pockets and high expertise have remained in the market.

Market players noted that some sellers have canceled public bidding for their realty objects, lest they would have to accept cheap prices at the second or even the third bidding.

Meanwhile, banking officials reported that faced with the luxury tax, some construction firms in central and southern Taiwan have begun to released their stockpiled realty holdings to the market, at considerable discounts. Taiwan Cooperative Bank has instructed its staffers to prevent speculators from dumping their stockpiled houses to the bank by applying mortgages via dummy accounts.

Some housing brokers predicted should the luxury tax hit the road on July 1, as scheduled, there will appear a wave of selloff of properties in mid-May. In fact, in addition to sharp decrease in the visitors to the construction sites, the cases for the sale of second-hand houses at housing brokers have also plunged recently, according to market players.