The China Post news staff
Construction stocks plunged 3.8 percent yesterday as the government disclosed a plan to curb real estate speculation. Many construction issues fell to their day’s limit of 7 percent in mid trading, with the sector dropping over 5 percent at one point before closing down more than any other stock categories. Analysts said the construction sector is expected to remain weak through the first half of year. Premier Wu Den-yih confirmed that the government is looking to introduce a 10 to 15 percent luxury tax to curb speculative real estate transactions as early as the second half of 2011 if legislators support the move. According to the finance ministry’s planning, the target of the anti-speculation measure will be residential properties that are not used by their owners but resold soon after their purchases. Such property owners would have to pay a 15 percent transaction tax on the actual sales price of their units that are sold within a year after purchase, according to MOF proposal. The rate would fall to 10 percent if such properties are sold in the second year after purchase, and no luxury tax would be imposed on properties that are held more than two years.
Analysts from the real estate market said the measure would reduce the number for speculators by 30 to 50 percent, according to the United Evening News. But Chang Chin-erh, a land administration professor from National Chengchi University, said the luxury tax would achieve some effects. But the fundamental solution to real estate speculation is to limit the availability of loans for speculators, Chang said.