Cabinet announces measures to boost real estate market

The Cabinet announced the measures amidst a slowing economy and surging jobless rate.

The government plans to extend permits on construction licenses for two years to help reduce new-home supplies in the market, the Cabinet said in an e-mailed statement. The measure would allow developers to push back their projects without getting new permits once the existing ones expire, according to the statement.

It also plans to let banks extend mortgage payment periods and allow a longer grace period during which home owners pay only interest, the statement said. Taiwan’s mortgage payment usually lasts for 20 years, while the grace period is two years.

Developers and scholars expressed mixed opinions over the new measures.

Chao Teng-hsiung, chairman of developing giant Farglory Group, said it was about time the government did this. “The extension of construction permits would effectively keep the supply and demand of houses in balance,” he said. “We can feel the sincerity of the government in doing this.”

He further added the worst of the current real estate downturn has passed. “Now is a good time to enter the market,” he said.

Other provided different opinions.

“This provides little help to the dwindling real-estate market,” Chuang Meng-han, an industrial economics professor at Taipei-based Tamkang University, said in a telephone interview yesterday. “The market will be good only when the equity market and the overall economy are performing well. The government can suggest the banks to loosen their lending policies, but it’s up to the banks to give out credit and banks will continue to scrutinize and be selective.

Professor Chang Chin-er of National Chengchi University, meanwhile, spoke from the perspective of home prices. “Home prices have surged at a rapid pace over the past few years, outpacing people’s salary growth,” he said. “Developers have yet to lower their prices, yet the government is on their side. This is not what I call fair.”

The seasonally adjusted jobless rate rose to 4.29 percent, the highest since February 2005, with the number of people unemployed climbing to 468,000 from 448,000 in September, the statistics bureau said Monday.

Taiwan’s economy shrank 1.02 percent in the July to September period, and is forecast to contract 1.73 percent in the current quarter, the government said last week.

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