Fri, Jan 10, 2003 - Page 10 News List

Home-loan plan awaits approval from Cabinet

By Kevin Chen  /  STAFF REPORTER

The Ministry of Finance's move to offer an additional NT$200 billion in preferential home loans bolstered construction sector shares yesterday, with 29 out of 34 listed construction companies closing limit-up.

Vice Minister of Finance Sam Wang (王得山) said Wednesday that the central bank would be charged with arranging NT$200 billion in new preferential loans for home-buyers to bolster the property market.

The plan is awaiting final approval by the Cabinet.

The loan package will allow home-buyers to borrow at a rate of 2.8 percent, Wang said. Mortgage rates are above 4 percent. Each home-buyer can borrow up to NT$2.5 million, he said.

The construction sector rose 5.6 percent on the TAIEX yesterday.

Cathay Real Estate Development Co (國泰建設), the nation's largest developer, rose NT$0.55 to NT$8.75 per share. Goldsun Development & Construction Co (國產建設), Taiwan's fifth-largest developer, advanced NT$0.3 to NT$4.64 per share.

"The ministry's announcement is really what we've been waiting to hear," said Lai Cheng-i (賴正鎰), chairman of the Taiwan Construction Development Federation (台灣省建築開發公會). "Cheap loans are likely to stimulate the property market."

The federation is home to some 3,000 members from the domestic real-estate sector.

"History has shown that preferential loans help," Lai said.

According to statistics released by the Ministry of the Interior last month, some 324,000 housing units -- both existing homes and new homes -- changed hands last year, up 25.1 percent from 259,000 units in 2001, the first increase year-on-year since 1996.

Lai said he has asked the ministry to put the new policy into effect as soon as possible.

"The previous loans are expected to be used up by end of February," Lai said. "So we expect the government to start the new package before the Lunar New Year holiday at the earliest."

He was discussing the conclusions of a meeting with Premier Yu Shyi-kun yesterday.

The government has so far offered a total of NT$720 billion in preferential home loans since August 2000.

That package has helped sell off some 400,000 housing units over the last 30 months, said Chen Chih-hui (陳芝慧), a senior researcher at Evertrust Rehouse Co (永慶房屋).

Another industry watcher yesterday also applauded the ministry's announcement.

"In the past, most people could not afford high property prices in Taiwan," said Jacky Tsai (蔡孟頤), associate director of Colliers International Taiwan. "But now it's lower interest rates and lower property prices that help boost buying in the market."

Property prices in Taiwan have stagnated or dropped in recent years because of an over-supply which was created in the late 1980s.

"This will be a very good opportunity for residential home-buyers," Tsai said. "For many Taiwanese, owning property is still a top priority."

While the real-estate market seems to be showing signs of recovery, the domestic construction sector is still keen on having the government open up links with the China as soon as possible.

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