Shih-Yung Wei

BusinessSchool of Yulin Normal University, China

Nan-Yu Chu*

Department of Land Management, Feng Chia University, Taiwan

*Corresponding Author:This email address is being protected from spambots. You need JavaScript enabled to view it.

Te-Chin Hsu 

Department of Health-Business administration, Fooyin University, Taiwan

This email address is being protected from spambots. You need JavaScript enabled to view it.

Chih-Chun Hou

Yulin Normal University, China This email address is being protected from spambots. You need JavaScript enabled to view it.


In order to solve the problem of very high housing prices in Taiwan, the government implemented the Luxury Tax (Specifically Selected Goods and Services Tax) in June 2011 to prevent speculation in real estate and to guarantee the right of habitation. However, few research studies have explored the effect of this policy on the risk of real estate investment, as most studies focus on analyzing the short-term real estate market impact without any long-term observation, and so the effect of the policy cannot be measured effectively. Therefore, this paper used the EGARCH model to analyze the effect of Taiwan’s policy of the Luxury Tax on real estate investment, so as to discuss the change of risk (volatility) in real estate through a dynamic model. The empirical results found that the real estate is different from general commodities and does not have the volatility asymmetry phenomenon. Thus, the phenomenon of higher housing prices continuously has existed in Taiwan during the initial period of implementing this tax. Moreover, according to the analysis result of the Luxury Tax in the later period, Taiwan’s real estate market exhibits the tendency of slight volatility asymmetry - namely, the increased amplitude of housing prices tends to slow down gradually. This result shows that the Luxury Tax cannot hold down the continuous rise in housing prices, but it can reduce the increased amplitude of housing prices under long-term implementation of the policy. As a result, some policy announcement effects still exist. Due to the limitation in data acquisition, this research used Taiwan’s construction index as the alternative data for a real estate price index. It is suggested that follow-up research carry out a cross-check analysis of different databases.

Keywords:Real Estate Investment, Luxury Tax (The Specifically Selected Goods and Services Tax), Asymmetric Volatility

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