Although financial authorities have stepped up efforts to prevent real estate bubbles, Taiwan's bank loans to property developers are still on the rise, partly fueling the sky-rocketing property prices, analysts said Wednesday.

In March, bank loans for construction totaled NT$1.06 trillion, up NT$24.2 billion from a month earlier, hitting a new 13-month high, statistics from the Central Bank showed.

Local property prices in the first quarter of 2010 rose by about 10 percent from the same period a year earlier and are expected to grow further for the rest of the year, according to real estate agency Taiwan Realty Corp, adding that a recovering local economy was also a factor.

In recent months, the government authorities have put the booming local property market under close scrutiny in an attempt to prevent escalating market speculation.

The speculation is largely driven by anticipation of a boom in property values after Taiwan signs a landmark trade agreement with the mainland, which is expected to bring an infusion of capital to Taiwan's market. Also driving the speculation is extra cash flowing from people who are still cautious about investing too heavily in stock markets.

Market observers remain skeptical of the impacts of the government's efforts to stabilize the property market, as loans for property purchases are still growing.

"The move adopted by the financial authorities is not harsh at all. I do not expect it will have any immediate impact on property prices," Lee Jian-ming, an analyst with Sinyi Realty Inc, told CNA.

China Daily/CNA

(HK Edition 04/29/2010 page4)