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May 30, 2017

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Property stocks down on new luxury housing tax

TAIPEI -- Shares of local property developers encountered downward pressure Friday on the Ministry of Finance's new tax on transactions of luxury housing, dealers said.

The measure has undermined market sentiment toward the property sector amid fears that the tax will deter investors from trading highly priced homes, shops and offices, eroding profitability, they said.

The construction sub-index on the Taiwan Stock Exchange closed down 0.74 percent at 300.74 points as the overall weighted index ended up 0.03 percent at 8,598.31 points.

Shares of Kindom Construction Corp. lost 0.96 percent to close at NT$31.00 (US$1.03), while shares of Huang Hsiang Construction Corp. lost 1.31 percent to end at NT$49.00.

Farglory Land Development Co. was down 1.52 percent to close at NT$48.50, while shares of Chong Hong Construction Co. ended down 1.81 percent at NT$81.60.

The four developers have made extensive efforts to push luxury housing units.

However, Taiwan Land Development Corp. bucked the downtrend of the construction sector, closing up 2.27 percent at NT$11.25 after the property developer reported NT$2.52 billion in sales in 2013, up 560.56 percent from a year earlier.

Market analysts said the new tax dealt another blow to investor confidence in the construction sector among market worry that the government will take future steps to cap the high prices of home, a long-time concern of the public.

Prices of the homes themselves could remain high, however, as luxury homes in greater Taipei, particularly Taipei City, are scarce, analysts have said. That means the impact on property stocks could be short-lived.

Finance Minister Chang Sheng-ford said Thursday that sellers of luxury property will be required to report 15 percent of the actual sale price as annual income if they fail to present information on how much they paid for the property initially.

Selling prices of homes, shops and offices topping NT$80 million in Taipei City and New Taipei City and surpassing NT$50 million in other cities in the country will be subject to the new tax regulation.

The regulation follows the luxury tax that came into effect in June 2011 and aimed to cap extremely high home prices, particularly in northern Taiwan.

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