The price now didn’t match the reality
Monday, 5 April 2010
by the professor of NCCU張金鶚
The housing price is so high now, due to the “false demand” instead of truly lack of house supply.
These days the house price in Taipei still keep going much more higher, some employee of real estate industry said the way to solve this problem is to improve the public transportation between the suburbs and downtown and increase the house supply in the remote areas. The reason for lacking of houses in Taipei isn’t caused by the supply less than demand, instead of that, there are many houses in Taipei which are out of use. Investors don’t want to sell the house to people who really need to use it if the price is less than the bought price. In addition to the investors, some people afraid that they can’t afford the increasing price, so they urged to buy those houses that are affordable to them. These two reasons make the house price keep rising up.
In the view of economics, the meaning of demand is the one who willing and enable to purchase. Those investors can afford the price but they don’t need live in it; those people who want to live in the house can’t afford the price. This kind of false demand maintains the price in the high level nowadays.
The manager of government about the living area said, because the business cycle just recovered from the recession in the past few years, it’s not the right time to stop the increasing house price. But the price now is too high for those people who really need the house to live in. The reason for not to stop the rising house price isn’t reasonable for experts, in their opinion, if the house price keep in this high level, the cost in house price will have negative influence to the budget they want to spend in other living areas. If the government keeps let the price going up, it will lead to a house bubble.
According to experts’ opinion, the government should try their best to make the price back to reasonable instead of increasing supply and stop let the investors raise the house price through improve the related tax policy.
Reference: http://snail-tw.blogspot.com/2010/04/blog-post_05.html
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