The chairman of the Cabinet-level Council for Economic Planning and Development (CEPD) said Wednesday that he favors tightening credit controls conditionally to curb soaring housing prices, but added that he does not agree with raising bank interest rates to serve that end.

Fielding questions from lawmakers at the Legislative Yuan’s Finance Committee, Tsai Hsung-hsiung said he would prefer to impose conditional credit controls to ease the housing fever in prime urban areas, mainly because prices have been pushed up by cheap speculative funds. But he added that he does not agree with increasing bank interest rates, as doing so would impact the average home buyers.

The government will address the problem on three fronts — making information disclosure transparent, levying adequate tax to reflect real market values and preventing leveraged speculation — Tsai said.

Promising that the government sector, including the central bank, the Ministry of Finance and the Financial Supervisory Commission, will definitely deal with the thorny issue, Tsai explained that the government has already stopped selling large public land lots in Taipei City and that young and low-income earners will have their home-buying subsidized.

According to Tsai, Taiwan’s real estate tax rates are relatively lower compared to those of some other countries. However, as the government is trying to encourage the public to own their own homes, only taxes for non-residential property purchased as an investment than a home should be increased, he said.

Speaking on the same occasion, Yang Chin-lung, deputy governor of the central bank, said it would be more effective to adopt conditional adjustments aimed at specific groups than to simply impose a blanket increase in bank interest rates, as an overall economic recovery is still some way off.

In response to the question of whether the banks will soon raise key interest rates, Yang reiterated that such a decision can only be made after a central bank board meeting.

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