Wed, Oct 06, 2010 - Page 11 News List

Urban renewal plan will keep home prices high: expert

Staff writer, with CNA

A new urban renewal plan unveiled by the government will likely keep home prices high by encouraging more funds to flow into the local property market, an analyst said yesterday.

The Council for Economic Planning and Development (CEPD) approved on Monday a proposal by the Ministry of the Interior to earmark more than NT$18 billion (US$576 million) in financial assistance to help homeowners remodel or rebuild their properties.

“While the central bank has raised interest rates to cap local property prices, the government continues to pump capital into the market,” Hua Nan Securities (華南永昌證券) analyst Lin Cheng-chien said.

“The market has gotten the message. The government does not seem to want to see local property prices fall,” Lin said.

The central bank hiked the discount rate by another 0.125 percentage points at a policymaking meeting on Thursday last week, marking the second consecutive quarterly rate hike since June.

The central bank’s move was interpreted by market observers as the latest in a series of measures to prevent a property bubble.

Lin said the NT$18 billion urban renewal plan, which still requires the Cabinet’s approval, is expected to boost home prices, especially in the greater Taipei area, where those who participate in the plan will reap relatively higher financial gains.

Home prices in the Greater Taipei area have risen more than 30 percent after the local property market was hit hard by the global financial meltdown in 2008.

CEPD Deputy Minister Hu Chung-ying (胡仲英) said the urban renewal plan aims to improve the living standards of the country’s urban areas and provide a better living environment for the public.

The government is expected to receive applications from about 20,000 homeowners for loans to rebuild or remodel their properties under the plan.

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