Housing Bubble In Taipei...Resumes growth

The luxury tax had only a temporary dampening effect on the booming Taipei, says the CNA, and the market appears to have adjusted:

Citing the statistics, Yung Ching Realty Group, one of Taiwan's leading property sales agencies, said transactions of shops, offices and homes in the two major cities located in northern Taiwan grew 15.8 percent month-on-month in July, two years after the implementation of the luxury tax.

...

Under the tax scheme, a 15 percent tax was introduced on second homes not occupied by the owners and sold within one year of purchase. For such homes sold within two years of purchase, the sales tax was set at 10 percent.

The sales rise was driven by increased supply in Neihu and in several New Taipei city districts. Sales in July also rose in Tainan and Taichung. The key outcome is expressed in the final paragraph of the piece:

On the back of the July sales growth in July, the construction sector on the Taiwan Stock Exchange ended up 1.25 percent, with Cathay Real Estate Development Co. up 7 percent, the maximum daily increase, to close at NT$22.85, and Kindom Construction Corp. up 3.28 percent to end at NT$47.25.

...without the housing bubble driven by the low real estate taxes, the construction sector upon which the domestic political economy depends would take a huge hit, dragging down the entire economy. Remember what happened when the construction bubble in the US popped a few years ago....
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Daily Links:

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• Possible huge protest against mistreatment of recruits in the military? J Michael's take on the Hung affair in The Diplomat.
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• CNN Ireport on Taiwan protesters use of Les Miserables theme song.

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