Property rises on loosened regulations
The local property sector got a boost Friday from a decision by the central bank to ease credit control in the domestic housing market in the hope of encouraging home buying, dealers said.
The property sub-index closed up 2.13 percent at 248.24, outperforming the broader market, where the weighted index ended down 0.07 percent at 8,305.64.
Among the gaining property stocks, Highwealth Construction Corp. ( ) added 6.42 percent to close at NT$61.30 (US$1.91), Shining Building Business Co ( ) rose 4.46 percent to end at NT$11.70, and Huaku Development Co. ( ) gained 3.39 percent to finish at NT$57.90.
Soon after the local main board opened, buying in these property stocks was sparked by a central bank decision to relax credit control in the housing mar- ket, and momentum continued until the end of the session.
The central bank announced Thursday that it had raised the ratio of mortgage to home value from 50 percent to 60 percent for retail buyers in the local luxury housing market.
The central bank categorizes luxury homes as those valued at more than NT$70 million in Taipei, more than NT$60 million in New Taipei, and more than NT$40 million in other areas of the country.
In addition, the mortgage ratio for retail buyers of a third home and for institutional buyers such as corporations has been raised from 50 percent to 60 percent.
The central bank has also decided that individuals in certain areas of northern Taiwan seeking to buy a second home will now be able to borrow more than 60 percent of the value of the second property.
The areas in northern Taiwan specified on the central bank’s list are Bali and Yingge districts in New Taipei, and Taoyuan, Luzhu, Zhongli and Gueishan districts in Taoyuan.
It is the first time in five years that the local central bank has relaxed the restrictions on home mortgages, as it has been trying over the past years to maintain tight credit controls in a bid to rein in home prices in Taiwan.
Tseng Ching-der ( ), a manager at Sinyi Realty Inc. ( )’s research department, said the central bank’s new regulations are expected to boost transactions in the local housing market, which in turn will increase fund flows and lower liquidity risks for property developers.
He said the bank’s new credit rules are a signal that the government is unlikely to tighten up again on the housing market in the near future.