Taipei second from last in global luxury home price growth index

The prices of prime residential property in Taipei have fallen faster over the past year than in any major global city with the exception of Hong Kong, according to real estate market consulting agency REPro Knight Frank.

The average luxury home price in 37 cities in the world covered by the Knight Frank Prime Global Cities Index rose 4.4 percent from June 2015 to June 2016, but fell 7.7 percent in Taipei during the same period, ranking it 36th in the world in the survey.

The rate of decline was only surpassed by Hong Kong, which ranked at the bottom of the index with an 8.4 percent fall in the price of an average luxury home in the city, according to REPro Knight Frank.

Vancouver topped the rankings with a 36.4 percent increase in luxury home prices from June 2015 to June 2016, followed by Shanghai with a 22.5 percent increase and Cape Town with a 16.1 percent increase.

REPro Knight Frank said the index was compiled based on government statistics, including data from central banks of the countries where the cities are located.

For Taipei, a luxury home was defined as a residence costing at least NT$70 million (US$2.2 million), but it was defined differently in other countries, according to the consulting firm.

Andy Huang , associate director of REPro Knight Frank's research department, said the fall in Taipei's luxury home prices largely resulted from the government's policy to rein in soaring home prices that were putting homes beyond the reach of average income earners.

Huang said that while Taiwan's central bank has since eased credit controls on the domestic property market, its grip on the luxury home segment remains in place, which has scared many luxury home investors away and driven prices lower.

With interest in prime residential property fading, only 81 luxury units were bought and sold in Taipei -- the most watched property market in Taiwan -- in the first half of this year, down sharply from 209 units during the same period last year, REPro Knight Frank said.

Amid concerns over an economic slowdown and fears of a possible hike in property taxes, luxury home prices in Taipei fell 4.9 percent in the first half of 2016 alone, the second fastest decline of any of the cities surveyed, behind Moscow, Huang said.

He said his firm has forecast that luxury home prices in Taipei will fall 6-10 percent in 2016.

As for Hong Kong, REPro Knight Frank said weakness in the global economy, a 15 percent stamp tax faced by foreign property investors, and an increase in supply contributed to tumbling luxury home prices in the city during the June 2015 to June 2016 period.

Luxury home prices in Hong Kong fell 3 percent year-on-year in the first half of the year, they could fall 5-10 percent for 2016 as a whole, according to PEPro Knight Frank.

Though Vancouver placed at the top of the rankings, city authorities have announced a tax hike targeting foreign buyers that is expected to dampen market sentiment and send luxury home prices lower down the road, the consulting firm said.

Rounding out the top 10 in the index rankings were Toronto (up 12.6 percent), Melbourne (up 11.0 percent), Sydney (up 10.2 percent), Tokyo (up 9.2 percent), Guangzhou (up 8.8 percent), Singapore (up 7.9 percent) and Seoul (up 7.0 percent).

Source: Focus Taiwan