According to my understanding, the domestic business community has high expectations for the links and I believe the opening would be an effective way to attract tourists and investment from across the Taiwan Strait to help boost domestic industry, including the real estate sector. I have traveled to China several times and met with several major developers who were keenly interested in investing in Taiwan, particularly in property around tourist sites and in major cities. Therefore, I believe that the ban on direct links will be lifted in one year.
TT: What's the outlook for the domestic real estate market? Is the sluggish property market starting to bottom out?
Lai: According to market analyses, the property market has stabilized this year with no substantial, foreseeable price drops in sight, though the total supply is expected to drop by 10 percent to NT$160.3 billion worth of housing units this year. Meanwhile, we have also seen the existing residential property sales continue to rise since last year due to the government's incremental land-value tax break and low interest loans.
TT: How well has the tax cut aimed at boosting real estate trading worked? Should the government continue to offer the tax-reduction program?
Lai: The government originally allowed the incremental land-value tax to be halved for two years beginning in February last year. Interestingly, the cuts in land value tax allow sellers to sell properties at a lower cost, while on the other hand it gives buyers more bargaining power.
Because the tax reduction has effectively awakened our dormant real estate market while also increasing land value tax revenues by NT$50.2 billion, or 26 percent, from the previous year, the Ministry of Finance has planned to amend the law make the reduction per-manent. We welcome the move and hope authorities can quicken the pace in implementing the policy, because the original tax break is scheduled to end by the end of this year.
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