Governor Perng alarmed at speculative investors who bought 200 houses using money from bank loans.
Taiwan’s central bank Governor Perng Fai-nan called on financial institutions to take steps to prevent housing speculation after complaints from citizens.
“Many people have written to show their dissatisfaction that in the past one to two months, houses have been purchased and then resold at a higher price within a short time,” Perng wrote in a July 2 letter to the chairmen of all financial institutions on the island and published July 11 on the central bank’s website. “Many speculative investors have bought more than 200 houses and contracted real-estate agents to sell them, with the speculative money having come from bank loans.”
Taiwan’s monetary authority is seeking to rein in property speculation as lending expands and prices rise, spurred by record-low interest rates. The central bank raised its benchmark rate to 1.375 percent on June 24 as Taiwan’s economy recovers and introduced a 70 percent cap on loans for second homes while ordering banks not to extend further loans for renovations.
“The central bank has been applying pressure to get banks to stop lending to speculators for some time,” said Matthew Smith, a banking analyst at Macquarie Securities Ltd. in Taipei. “One concern is that if property prices come down, speculators will be the first to bail and the banks will be left dealing with the risk.”
View the full story in Business Week.
Do you know more about this story? Contact us anonymously through this link.