Members of the central bank’s board of directors have raised concerns about a return to a “property fever,” calling for precautionary steps to nix bubbles forming in the real-estate market.
Several of the members said that they felt uneasy about the pickup in local property transactions and prices, fueled partly by ultra-low interest rates worldwide, instituted to help mitigate the effects of the COVID-19 pandemic, according to the minutes of last month’s policy meeting released on Thursday.
“The central bank needs to heed the signs of bubbles forming in financial assets and the real-estate market, and put together precautionary policies or formulate response measures,” a director said.
Accommodative monetary policies at home and abroad were driving the phenomenon, with the US Federal Reserve intent on keeping interest rates close to zero for at least another three years, the director said.
Another director agreed that the central bank should closely monitor changes in the real-estate market and act preemptively before there is a public perception of spiking home prices.
Once that belief takes hold, it would be difficult to reverse the trend even with measures such as loan-to-value (LTV) restrictions or tax-based policies, the director said.
One director said that the government at all levels should join forces in dealing with housing market issues.
For instance, the central bank could tighten LTV limits, the Ministry of Finance could raise property tax rates and the Ministry of the Interior could require more transparent trading data to monitor the effectiveness of the measures, the director said.
Another director warned that some funds — repatriated by overseas Taiwanese businesspeople not using a government-incentive program — could have flowed into the property market.
Such funds are subject to higher income tax rates and the government is not in a position to obstruct their return, the Ministry of Finance had said earlier, adding that it would not extend favorable tax terms for capital repatriation.
Several board directors said that the central bank should continue to monitor changes in housing prices and share findings that might help policymakers.
Among them, a director said that the central bank should closely watch real-estate financing and consult with the banking sector for their views on the matter.
The central bank could then assess the information to determine whether it should introduce selective credit controls, they said.
However, one director said that the local housing market had been orderly so far.
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