The property bubble, slowing spreading around the island, is compelling the government to contemplate strong measures to bring it under control. To curb speculation, which some say accounts for half of all transactions, one of these is a new property tax on real estate.
The government is also considering revising the land valuations more frequently to keep up with the exploding market:
Taiwan’s central bank on Sept. 30 increased its benchmark interest rate by 0.125 percentage point for the second time this year after a jump in home prices fueled concern the island’s economic recovery may stoke a property bubble. Prices in the capital rose 7 percent from December 2009 to the end of September, said Stanley Su, an analyst at Sinyi Realty Co., Taiwan’s biggest real-estate brokerage.
The government is studying the tax “and we hope this would discourage speculation,” Lee told reporters in Taipei today.
The tax on property sales could be as high as 30 percent, the Taipei-based Economic Daily News reported, citing an unidentified official at the Ministry of Finance. Lee said the ministry hasn’t decided on the tax rate.
Taiwan also plans to revise its so-called published property values every year starting as early as the second half of 2011, said Wang, who works at the Interior Ministry’s land department. The benchmark for annual real estate taxes is now revised every three years.According to an RDEC-run online survey, rising costs for housing are the number one complaint of locals. Similarly, Taiwan Panorama reported a few months ago:
According to a survey of residential housing demand trends published by the Ministry of the Interior's Construction and Planning Agency, the price-to-income ratio in Taiwan's five largest metropolitan areas over the past few years has typically ranged from 6.0 to 7.0. For the last half of 2009 the figure stood at 7.08. But in Taipei City and County the ratio rose substantially-to 9.06 in the last half of 2009. It is estimated that residents of the silk-stocking Da'an District would have to put up 14.6 years of income to buy a home there.1990 levels! Remember after that bubble popped housing prices in the major cities spent the next decade collapsing. Ugh.
The following graph clearly shows that the price-to-income ratio in Taipei City began to rise rapidly in 2006-2007, and it now stands as high as it has since the housing bubble that peaked in 1990.
It will be interesting to see what happens, given that powerful construction and land development interests are intimate with the government. Will the government have the courage to push prices down?
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