The central bank’s latest credit controls would reduce property transactions by 10 to 15 percent this year, which would particularly affect people looking to move, developers and analysts said yesterday.
The central bank on Thursday banned lenders from granting grace periods to buyers of second homes in Kaohsiung, New Taipei City, Taichung, Tainan, Taipei, Taoyuan, and Hsinchu city and county.
The measure, which went into effect yesterday, is intended to prevent overleveraging of individual buyers, as the six special municipalities, and Hsinchu city and county account for 82.6 percent of mortgage loans nationwide, the governor said.
Lai Cheng-yi (賴正鎰), who owns Taichung-based Shining Group (鄉林集團), said developers would be less active in launching housing projects with volume likely to shrink by 10 to 15 percent to NT$1.2 trillion (US$43.27 billion) this year.
However, the central bank described its adjustment as “minor.”
The central bank previously directed its credit controls at corporate buyers, but shifted focus to individuals, Lai said, adding that the move would hurt real demand.
Chinatrust Real Estate Co (中信房屋) said that the absence of a grace period would affect people with relocation needs the most.
Buyers of second homes only need to pay NT$10,916 during the first three years of grace periods based on a 1.31 percent interest rate, giving them sufficient time to sell their first houses and move into a new one, Chinatrust said.
Without grace periods, owners would pay NT$33,608 a month to cover interest and the principal of a NT$10 million loan, it said.
Jessica Hsu (徐佳馨), head researcher at H&B Realty Co (住商不動產), said she was not surprised at the tightening measure, as real-estate lending has showed no signs of subsiding following two earlier waves of credit controls.
First-home buyers would underpin the market as they remain unaffected by credit restrictions, Hsu said.
That means property funds would flow to less popular locations, where homes are relatively affordable, especially for young people, Hsu said.
The central bank also cut the loan-to-value ratios for land financing from 65 to 60 percent, and from 55 to 50 percent for land plots in industrial parks. Buyers of land plots in industrial parks must take action on their development plans within one year after purchase.
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