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Expert warns anti-speculation measures to mean continued real estate slowdown

The government's anti-speculation measures have caused a freezing of capital in the real estate market, where a sales decline may continue, said Yen Ping-li, president of DTZ Taiwan, yesterday.

Right now, only life insurance companies have the money to buy properties, he said. "Frozen capital may result in continued sales decline in the real estate market, which is in for a cold, bitter winter," he said.

"Not only brokerage firms will close their businesses, some developers may also have to sell their assets just to survive," he added.

According to him, various crackdown measures launched by the government, including credit control and the stock capital gains tax, have diminished Taiwan's stocks and real estate, which he described as the two lifelines of the island.

"I don't know why the government keeps launching measures that suppress these two industries," he said.

The credit control measures have strongly impacted sales as loan reductions and interest rate increases have devastated even those who buy properties for residential purposes, he said.

Yet paradoxically, prices have remained high even as sales have gone down sharply. Yen attributed this phenomenon to the fact that, in the midst of a low-interest environment, sellers are in no hurry to sell their properties.

As for next year, Yen said a price decline in commercial real estate is unlikely. Yet with stricter loan standards, sales are unlikely to go up, he said.

"What the government should do is to lower taxes to bring more capital into the market," he said.

1 Comment
October 11, 2012    mike@
As a foreigner living in Taiwan I was impressed with the very high rate of small business ownership. Small business is the number one method for social mobility. The primary factor that allows Taiwanese to start and maintain a small business is low property overhead. Real estate speculation inarguably leads to higher property values, thus making it increasingly difficult for small business owners and in effect decreasing social mobility. In other words real-estate speculation will eventually destroy Taiwan's way of life and should be suppressed.
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