Urged by construction industry leaders to take action to boost the ailing domestic property market, the government yesterday promised to look into a raft of measures proposed by the building giants.
Farglory Group (遠雄集團) chairman Chao Teng-hsiung (趙藤雄) and five other construction industry representatives yesterday had a closed-door meeting with Premier Liu Chao-shiuan (劉兆玄) to present their recommendations on driving growth in the real estate market.
Chao is also honorary president of the Federation of the Real Estate Development Associations (FREDA).
Among the eight measures suggested by the construction industry, Liu agreed with the proposals to extend the validity of construction licenses by two years and ramping up urban renewal, but was more cautious about other measures, especially relaxing restrictions on Chinese investment in the country’s real estate market.
FREDA president Wang Kuang-shiang (王光祥) told reporters afterward that the extension of licenses would provide construction companies with more leeway to decide when to put new housing projects up for sale, which would help sustain housing prices.
Asking the government to remove restrictions on the inflow of Chinese capital into the local real estate market, Federation of the Real Estate Associations of Taipei president Wu Pao-tien (吳寶田) said opening the market to funds from abroad would be the most effective way to boost the economy.
Taiwan opened its real estate market to Chinese buyers in 2003, but maintained certain restrictions. Of the 21 applications that have been filed since then, only six have been approved by the government, an official at the Ministry of the Interior’s Department of Land Administration said.
The six purchases were all small apartments bought by Chinese spouses of Taiwanese nationals, the official said.
The regulations require Chinese buyers to prove that their funds originate in China and do not come from inside Taiwan. To reduce the possibility of speculation in the local property market, Chinese real estate investors are not allowed to stay in Taiwan for more than one month per year.
While opening up the real estate market to Chinese investment was government policy, no timetable has been set for lifting the restrictions, Public Construction Commission Chairman Frank Fan (范良銹), who also attended the closed-door meeting, told reporters.
“Basically the government is heading in the right direction,” Fan said, but added that the move should be an integral part of the government’s plan to advance cross-strait relations.
A press statement quoted Liu as saying that he would instruct the Ministry of the Interior and the Mainland Affairs Council to implement steps to relax restrictions on real estate investment from China as soon as possible in accordance with the cross-strait negotiation process.
The industry representatives also urged the government to encourage banks to offer buyers better mortgages in view of the credit crunch plaguing the country’s real estate market.
They said they hoped banks would raise their loan-to-value ratio and extend the repayment period on mortgages.
Liu told the industry representatives that he would refer their suggestions to the Financial Supervisory Commission and that the Cabinet’s tax reform commission would assess their suggestions of abolishing the tax and stamp duty on the acquisition of real estate and raising the limit on mortgage interest tax deductions.
The government’s response was met with mixed reactions.
Chao said the local property market would soon rebound if the government followed through on its plan to secure loans for both developers and home buyers.
But Chang Chin-oh (張金鶚), professor of economics at National Chengchi University, disagreed.
He said the government should not interfere with the market’s price correction, which he said was the main reason why home buyers were adopting a wait-and-see attitude.
Chang said the government’s policies were likely to prolong the market’s slowdown by preventing it from hitting bottom, which usually ensures a quick recovery.
The government appeared not to have a solid plan, he said.
Financial Supervisory Commission Chairman Gordon Chen (陳樹) said the government would soon facilitate a review process to identify steps that would benefit mortgage borrowers without interfering with banks’ autonomy in setting credit policies.
He did not say whether the policies would be mandatory or if banks would face penalties if they refused to cooperate with the government’s plans.
ADDITIONAL REPORTING BY STAFF WRITER
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