The government-sponsored preferential mortgage program for young couples, while very popular in the past, has seen a sharp decline in applications this year, dropping by more than 60% from a year ago. Analysts believe that this may be caused in part by the recent passage of the luxury tax bill.

The luxury tax has passed the third reading in the legislature.

Even though the public has high hopes that it would effectively lower property prices, many potential homebuyers believe the price drop would be limited.

Before the tax officially goes into effect, programs that relate to first-time homeowners have been affected.

For example, when the low-interest mortgage loan program for young people was first launched in 2009, more than 17,000 applications had been received.

The slot was raised from 10,000 to 20,000 last year and the authorities received 23,000 applications.

However, the number of applications is only around 8,000, about 63 percent less.

Scholars believe the potential homebuyers are slowing down given bearish sentiment in the property market and that the property prices are way over the affordable levels.

The program sponsored by the government offers a two-year interest free mortgage of up to 2 million NTD to qualified first-time home-buyers, who are between 20 to 40, without any property under his or her name.

Ministry of the Interior refuses to comment on the slide of application numbers and says that since there are still unfinished quotas, the program may start to receive applications in the second half of the year in the hope to alleviate the burden associated with home buying.