\nUnchecked speculation, low supply and a tradition of homeownership have forced property prices in Taipei skywards<\/p>\n
There\u2019s a popular saying in Taiwan, which roughly translates as \u2018whoever has land has money\u2019.
Unchecked speculation, low supply and a tradition of homeownership have forced property prices in Taipei...<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true},"categories":[1],"tags":[],"class_list":["post-10560","post","type-post","status-publish","format-standard","hentry","category-property-news"],"jetpack_featured_media_url":"","jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p75ss1-2Kk","jetpack-related-posts":[{"id":19070,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/taiwan-commercial-real-estate-on-a-slowdown\/","url_meta":{"origin":10560,"position":0},"title":"Taiwan commercial real estate on a slowdown","date":"July 8, 2016","format":false,"excerpt":"\r Despite general market lethargy, one development is bringing home the bacon The Taipei skyline at night. 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\nThat\u2019s certainly true on the battlefield that is the Taipei housing market. House prices have skyrocketed in the capital, almost tripling in the last two decades. In proportion to income it is one of the most expensive places in the world to buy property.
\nIn 2014, the Demographia International Housing Affordability Survey rated Taipei\u2019s house-price-to-income ratio at 15.7. Even in New York, where the average unit price hovers around the USD1 million mark, the ratio is only at 6.1.
\nIt\u2019s easy to lay the blame \u2013 and many in Taiwan do \u2013 on Chinese capital inflows, but experts say that it\u2019s a homegrown demographic that is behind the stratospheric price inclines.
\nTaishang is the term for Taiwanese businessmen who made their fortunes in China. They returned home to buy up property, and were further enabled by an inheritance tax cut from 50 percent down to just 10 percent that was enacted in 2009.
\nSeizing the opportunity to save huge sums on their tax bills, the taishang bought swathes of luxury property in Taipei, hiking up the vacancy rates and pushing prices skywards in the city.
\nWhile property prices continue to rise in the city, the taishang have had little impetus to sell these properties yet. This has led to \u201ca vicious circle inflated into a speculative bubble,\u201d according to Jakub Piasecki of The Diplomat.
\nThe Taiwanese government sought to puncture the bubble painlessly with a luxury tax, which was introduced in 2011. Taxes of up to 15 percent were levied on properties sold within two years, but this failed to tackle the taisheng\u2019s hoarded nest eggs. It didn\u2019t help that the taxes were a drop in the Pacific for the wealthy.
\nIllegal units \u2013 7,000 at the last count \u2013 abound in Taipei as new developments scramble for limited land among the empty apartments owned by the speculators.
\nThe price hikes have been further spurred by a Taiwanese expectation of owning property rather than renting it. This societal trend means there has always been persistent demand for residential property, regardless of the high prices.
\nMore: Why Taiwan\u2019s real estate market may be facing a long-term slump
\nDomestic homebuyers have at least been aided by low mortgage rates and minimal down-payments on new developments \u2013 sometimes as low as TWD80,000 (USD2,500).
\nOn the other side of the coin, foreign investors are giving Taipei the cold shoulder. Rental yields are as low as 1.57 percent, according to the Global Property Guide, and a recent ULI report gave Taipei the lowest \u2018buy\u2019 recommendation out of 21 APAC cities for residential rental investments.
\nWhen foreign investment was coming in, it was invariably coming from the Chinese mainland. A total of USD500 million in \u201cqualified domestic institutional investor\u201d permits are allowed from China into the Taiwan property market, although only USD257 million had been applied for by October 2015 since 2010, claims Tseng Ming-chung, chairman of the Financial Supervisory Commission.
\nAnd now that prices are so high and rents so low, \u201cthere is simply much more money to be made on the mainland market,\u201d says Chang Chinoh, a professor of land economics and a board member at the Land Bank of Taiwan. The mature markets of Europe and the US are similarly more attractive.
\nAnd now even local sentiment has turned under the pressure of political change.
\nThe new president-elect Tsai Ing-Wen, made addressing the housing crisis a key plank of her successful campaign.
\nReducing speculation was also an aim of the previous government, who introduced an overhaul to the Capital Gains Tax (CGT) at the start of 2016.
\nDesigned to \u201clower the profit of property investment and make buyers more conservative as they make a price offer,\u201d according to Erin Ting of Savills, CGT now levies tax of up to 45 percent on property sold within six years of purchase, with only property below the TWD4 million (USD120,000) threshold escaping the hike.
\nIt will now also be calculated on the actual transaction price of the property, as opposed to just the government assessed land value, which it was prior to January.
\nAlthough the move can be construed as another deterrent to investors, experts are confident that it a healthy development for the Taiwanese housing market.
\n\u201cThe structure of the tax measures themselves is to reduce speculation and quick turnover,\u201d says Joseph Lin, managing director for CBRE Taiwan. \u201cIt will make the system and real estate market healthier as the transaction tax has previously been very low in Taiwan with minimal CGT.\u201d
\nMore: The most expensive construction sites in Asia
\nFor now, however, the combination of the taxation overhaul and the political uncertainty has dulled the appetite for property purchasing and seen prospective buyers take a \u2018wait-and-see\u2019 approach.
\nTransaction volumes have frozen; Savills recorded a decline of 15 percent in the year to October 2015.
\n\u201cThe effects of the tax reform and the presidential election have pushed both buyers and sellers to the sidelines as they wait for prices to adjust,\u201d says Jamie Chang, assistant manager for JLL Taiwan.
\nAs the domestic market struggles, Taiwanese investors are turning their attentions to overseas property.
\nCathay Life Insurance, Taiwan\u2019s biggest life insurance company with over USD200billion in assets bought London\u2019s Woolgate Exchange for USD435billion in July 2014. Other companies and wealthy individuals are known to be taking the plunge by buying up commercial and residential property in Europe and also in Asia\u2019s emerging markets where property is relatively cheap and rental yields more generous.
\nBack in Taiwan, the sluggishness of the market is predicted to spur a modest price drop of around 5 to 10 percent by the end of 2016. The luxury market, as the supposed target of such measures, is likely to witness the most significant price declines.
\nExperts are however confident that the Taipei market will rebound in the mid-term once the dust has settled on the new government and the CGT.
\n\u201cAfter the effects of the new taxation settles, market activities will resume due to persistent demand,\u201d says JLL\u2019s Chang.
\nThe Taiwanese obsession with owning property in Taiwan, along with the low supply in Taipei, means that the current trough is likely to be a temporary one \u2013 no matter how unattractively high the prices get. .
\n
\nSource : property-report.com
\nRead more…Taipei rising: will new tax reforms signal a real estate comeback?<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"