Gov't curb on home prices criticized

Public banks have recently begun to tighten credit to investors or luxury home buyers by limiting the amount of loans in proportion to a house's value, and by scrapping the grace period in which investors pay interest only.

At the same time, the government has put a halt to sale of state-owned land blocks, and is considering a tax on idle land purchases to discourage buyers. Some buyers are known to purchase idle land blocks and sell them years later to rake in a huge profit. During a meeting of the Real Estate Developers' Association of Taipei yesterday, its chairman, Wang Kuang-hsiang, blasted the government for these measures, which he said would eventually hurt all homeowners.

“Currently, 87 percent of the population own homes, with a total value of NT$79 trillion. This accounts for a huge portion of the NT$130 trillion total asset held by all Taiwan citizens,” he said. “If home prices nosedive as a result of these measures, then everybody will suffer.”

He said he was not against partial credit control, yet he urged the government not to tax idle land purchases, as this measure will cause an outflow of foreign capital. He also urged the government to resume state-owned land sale within six months to put supply and demand in balance. The developers' association, meanwhile, also recommended the government to speed up its urban revitalization programs and spearhead more infrastructure constructions to provide easier access to young people or marginalized groups of the society living on the outskirts of cities.

Another real estate guru, chairman Chao Teng-hsiung of Farglory, also voiced out his anger towards the government measures to suppress home prices.

“Has the government got nothing else to do? Will lower home prices reduce unemployment and raise Taiwan's GDP? Can people really afford homes if their prices were lowered?” an irate Chao asked.

He pointed out the NT$2 million to NT$3 million unit prices for which some luxury properties are offered are just offering prices. The government should investigate the actual transaction price, he said.

At the same time, luxury apartments in Taipei and Taichung account for less than 0.1 percent of the total in the housing market, he said, adding these properties are mostly purchased by China-based Taiwanese businesspeople seeking to capitalize on a reduction in the island's gift and estate tax.

“What the government should do,” said Chao, “is to figure out ways to increase jobs and help people get their pay raised, rather than stigmatizing wealthy people, making them feel guilty about purchasing a luxury house.” Separately, Taipei has increasingly become a buyer's market, given the recent credit control measures. According to H&B Business Group, buyers on average ask for a five to 10 percent reduction from the seller's offering price.

“Yet, most of the time sellers are not willing to budge, putting buyers and sellers in a stand-off position,” H&B said.

Subscribe to The China Post and save 25%. Click here

SharePrintEmail

Write a Comment

Terms

Enter your comments - 3000 characters max

Type in image code

Submit

 Receive China Post promos
 Respond to this email