Construction loans grew for an eighth straight month to a record NT$2.06 trillion (US$68.21 billion) last month, data released by the central bank on Wednesday showed.
On an annual basis, last month’s figure increased 12.54 percent, the largest growth in eight years, implying that the market remains on course for steady growth, the bank said.
Purchases of land and commercial buildings have been robust since the beginning of this year, thanks to demand from returning Taiwanese businesses amid the US-China trade dispute, encouraging builders to launch new projects, it said.
Builders have also taken the opportunity to promote idle industrial land, while some small non-tech companies sold old factories to tech companies this year, which all helped push construction loans to grow at a double-digit annual rate for six consecutive months, market watchers said.
Construction loans are indicative of the construction sector’s attitude toward the real-estate market, which fell to a low of NT$1.61 billion in June 2016 after the government introduced a series of policies to rein in the market.
While the situation has improved since then, the pace has been slow and less apparent until this year.
“The average year-on-year increase in the past five years was 4.7 percent. We believe the surge in loans for construction [this year] is mainly attributable to Taiwanese businesses moving production back to Taiwan as a result of the trade war,” Yuanta Securities Investment Consulting Co (元大投顧) analyst Lisa Chen (陳玫芬) said in a note on Wednesday.
Demand for industrial land has been on the rise throughout the year and companies’ expenditure on industrial-related construction licenses could hit the highest in five years this year.
“Spending on factory, industrial and storage construction licenses also increased gradually since hitting a trough in 2016,” she said.
“Expenditure in 2019 is expected to reach NT$57.41 billion, which would be the highest level in five years,” she added.
The central bank’s monthly data also showed that housing loans grew 5.97 percent from a year earlier to a more than eight-year high of NT$7.36 trillion last month.
The continued growth in housing and construction loans, as well as the uptrend in property transactions and prices this year, appeared to have aroused the concern of some of the bank’s board members at their quarterly meeting on Thursday last week.
“The bank will keep a watchful eye on risk management in financial institutions associated with real-estate lending so as to safeguard financial stability,” the central bank said in a statement released after the board meeting that day.
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