Central Bank Governor Criticizes Shining Group for Housing Speculation

Central Bank Governor Criticizes Shining Group for Housing Speculation

      Source: Taipei newspapers   April 22, 2010

The legislative Finance Committee members, including KMT Legislators Lo Ming-tsai, Lai Shyh-bao and Lin Te-fu, went to the Central Bank of China (CBC) on an inspection tour and met with CBC governor Perng Fai-nan. According to Lin Te-fu, CBC governor Perng criticized Shining Group for constructing exorbitantly priced luxury condos. It is rare in this country for a Central Bank governor to accuse a specific development company of housing speculation.

KMT legislator Lin Te-fu said, “During the meeting, Perng cited one of the Shining Group’s housing projects, named “Shih-lin Official Residence,” as an example, saying the Shining Group had utilized the media to jack up its housing prices.”   

Lin said that Perng said he believed it was an act of speculation as the Shining Group advertised that the condos in the “Shih-lin Official Residence” would be sold at NT$ 3 million per ping (one ping equals 36 square feet), an exorbitant price in Taiwan.

Lin said that Perng accused the Shining Group of engaging in housing speculation activities because Perng found after investigation that the final purchase prices did not match with the asking prices.     

In order to curb housing speculation activities, the Central Bank enacted a series of measures to discourage “luxury condo” investors recently. In addition to conducting an investigation of the real purchase prices in “luxury condo” transactions, the Central Bank will also launch inspections of 10 state-owned and private banks this week to see if they strictly followed the government’s housing loan policies.  

However, Perng stressed during yesterday’s meeting that the purpose of the financial inspections was not to dampen housing activities, but to ask banks to pay more attention to risk controls.  

With regard to the Central Bank’s accusation, Shining Group Chairman Lai Cheng-I responded that the housing prices were determined by market mechanisms, not him. Lai argued that undue concentration of resources in Taipei City was the main cause of soaring housing prices in Taipei City. If the government really wanted to solve the problem, it should seek a well-balanced development strategy in Taiwan.   

Lai explained that the level of housing prices was related to a country’s competitiveness and social development. The housing prices in Taipei City were relatively low compared to other major cities in neighboring countries. If the government could not work out means to solve the problem of undue concentration of resources in Taipei City, the problem of soaring housing prices would only escalate.

Lai pointed out that the “Shih-lin Official Residence” housing project was a commercial real estate project, not residential, adding that the buyers were wealthy men from foreign countries. Lai said that he regretted that the Central Bank had accused the Shining Group of contributing to the soaring housing prices as it had caused damage to the company’s reputation.   

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