New home-loan plan welcomed

The nation's real-estate sector yesterday applauded the government's announcement that it was extending the preferential mortgage loan program for first-time buyers, saying that the policy would provide a boon to the reviving property market.

"We are very glad about the government's decision to extend the preferential home loan plan," Lai Cheng-i (賴正鎰), chairman of the Taichung-based Taiwan Construction Development Federation (台灣省建築開發公會), said yesterday.

The scheme is expected to act as a stimulant to the nation's real-estate industry, which has been slowly recovering from the impact of political unrest after the presidential election, Lai said.

The real-estate sector has been slowly recovering since the second half of last year, following a 13-year-long recession, Chao Teng-hsiung (趙藤雄), chairman of the Taipei-based Far Glory Group (遠雄集團), said earlier this month.

Against this backdrop, demand for mortgage loans has been increasing in recent months. Outstanding mortgages at domestic lenders reached NT$3.09 trillion as of the end of April, up NT$52 billion from the previous month.

Lai said the prospects for the real-estate market look bright after the May 20 presidential inauguration.

"We did see a recovery in the number of interested homebuyers and deals closed by between 20 percent and 30 percent after May 20, compared to a plunge of up to 50 percent caused by the political turmoil after the March 20 presidential election," said Lai, who is also chairman of a construction company Shining Group (鄉林).

Lai made the remark after Premier Yu Shyi-kun yesterday announced that the Cabinet would allocate another NT$300 billion for preferential mortgages for first-time homebuyers.

However, the government will cut its subsidy to 0.125 percentage points from 0.25 percentage points, meaning mortgage-holders will pay 2.425 percent.

Some 160,000 families are expected to benefit from the program by March next year, when funds for the program are expected to have run out.

The government initiated the low-interest home loan plan in 2000 to boost the property market and allocated NT$1.2 trillion to the scheme. About 620,000 families have benefited from the program.

Lai predicted that a recovering stock market combined with the cheap home loans would bolster the property market.

He forecast that property prices would rise by between 5 percent and 10 percent a year over the next seven years.

James Ting (丁福致), deputy chief executive officer of the semi-official Taiwan Institute for Real Estate Information, said that while the renewal of the scheme would boost the property market, it was merely a stop-gap measure.

For the long-term and healthy development of the industry, it is essential for government to raise the standards and value of the sector by improving territorial planning, infrastructure and transaction protection for homebuyers, Ting said.