Taiwan Housing

Written By: Song Yen Hsun

Overview

The price of house in Taiwan rise in a extremely speed in these years. Young people who just started to work found it’s almost impossible for them to have their own house in this kind of price level. According to some investigations, people in Taiwan now have to save money without eating anything for 16 years in order to by their own house. Though this may be a little bit too exaggerate from the reality, it still shows the housing price problem in Taiwan now.

Reasons for Rising Housing Prices

Usually the price of house will keep rising because of the population still increase in a high speed and the acreage of land maintains the same. So every country all has to face their problem on the price issues. But the housing problem in Taiwan is very complicated as a result of the inappropriate invests and it started to go out of control.


1) The inappropriate investment
First, the investors created a weird situation called “false demand”, in this situation the demand of houses seems very large than the supply, so the price rise in a high speed within a short period. But the true condition is most of the houses which were in the real estate market are out of use, they just became a kind of goods. 


Real estate investors use their huge capital to buy lots of house and just wait their price to go up after years, than they re-sell the houses at a much higher price. They use this method to earn lots of money in a short time. Actually they didn’t do anything to increase the value of the house, what they only do is spend their money and own the houses for few years to wait for the right moment to resale it again. The result of this is the demand of house seems to be very large due to the investors’ purchasing in the market. But do this house really in used? The answer is no! People who really need to live in this house can’t afford the high price of it, and the people who make the high demand of house don’t live in it.


2) The hot money from China
Second, the hot money from mainland China started to affect the real estate market in Taiwan after the agreement of ECFA and MOE. They used their money to join the trades of houses in Taiwan, which makes the speed of price increasing much more higher than it should be. Although they own the houses, but they don’t live in it just like the investors in Taiwan. The influence of this kind of hot money started to become more and more powerful these years with the highly improvement of China’s economic.


These two reasons lead to the extremely high price of houses in Taiwan.

Related Housing Policies in Taiwan

The government didn’t want to affect the price of houses in Taiwan at first. But after the price started to go out of control, experts in real estate invoked that government should take some actions to stop or slower the speed it rising.


1) Luxury Tax
The government passed a policy related to the real estate market which is called the “luxury tax”. This tax policy charges the investors for a high proportion for 15% of the deal price if the seller owns the house less than one year, 10% for less than two years. Government plans to slower the speed of price increase through decline the inappropriate trades in the market.

2) Other Policies

Taiwan - Article from Citizen Journalist

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

Taiwan - Article from Professional Media

Housing issue needs to be solved  

Sat, May 01, 2010
By Shane Lee and Liu Ke-chiang (Taipei News)


Housing is one of the most important issues in modern societies. It is a core issue that governments must deal with, but for several decades’ successive governments in Taiwan have failed on this issue. As well as being a basic human need, housing is related to national development, land use and policies, income distribution, government-business relations, social class, human rights, cultural shifts, sustainable cities and so on. Unequal access to housing is a result of many social problems.


The housing policies governments propose give us a glimpse of how they view people’s rights, and of their ability to provide a vision of life in the future. In the past, governments have equated the housing problem with the housing market. They have promoted the distorted phenomena of commoditization and luxurification of housing. Now Taiwan is seeing the warning signs as the “alliance of shell-less snails” (無殼蝸牛聯盟) re-emerges after a 20-year hiatus. Government officials have responded by repeating the mantra of “fostering a sound market,” while seeking to slip out of their own responsibilities and ignoring the market’s failings. This approach cannot assuage the anxiety felt by many members of the public. This raises several points worthy of discussion.


First, the authorities would be unwise to see the “shell-less snails” as representing just a minority, or a point of view confined to northern Taiwan. It should be recognized that the housing problem is a diverse and pervasive issue. Whatever different features the housing problem may have in different places, and whether big or small communities are involved, the main thing is that housing rights are fundamentally and closely linked to many other kinds of rights. In Taiwan, Aborigines’ housing needs are the most obvious sore point.


Following the floods caused by Typhoon Morakot in August, the process of resettling and reconstructing Aboriginal villages has been like an enchanted mirror highlighting the longstanding uncaring attitude of the current and preceding governments to social minorities, their culture and social ties, as well as to land planning and the social significance of housing rights, as well as their incompetence in dealing with these issues.


Second, housing policy reform should not be clumsily simplified in terms of suppressing the housing market. Sharing social benefits does not necessarily mean twisting the arms of the rich. To exaggeratedly interpret reasonable demands for meeting the public’s need for housing as encroaching on people’s property is to limit housing policy and associated problems within the bounds of a market economy viewpoint, without giving any thought to other possibilities. Handing limited land resources over to be manipulated through competition and one-sidedly encouraging real estate businesses that favor big, wealth-flaunting projects is to abandon government’s responsibility for putting a check on inappropriate planning and development under free-market forces. That can only create unending urban problems, and governments will suffer the consequences of their own actions.


In view of this, our first suggestion is to set aside illusions about giving free rein to market
forces and expecting a robust market to solve the problem. The housing situation reflects the dominant social forces of the time. The stress these days is on building luxury homes and market competition pervades. It is time to get back to the level of human needs and to think about the complicated nature of housing.


The government should stress diversity in housing, and it should protect rent-paying tenants of all kinds from being eliminated by market forces and help them to overcome barriers and discrimination, so that they can regain the right to seek quality rented homes. The government should even consider reviving the provision of publicly owned rental accommodation.


The right to a home is a reflection of social relations, including relations of culture and production. In recognition of all the different kinds of families, the government should affirm the existence of mixed use and make regulations to support it. This applies especially to the existence of different grades of housing within local communities, with people from different social classes living within the same diverse neighborhoods. The trend toward uniformity of housing in particular localities should be avoided.


The diverse requirements for housing among people living in Taiwan can be gradually resolved by insisting that developers engage in mixed projects and by keeping their profits at a reasonable level. This could cultivate a sufficiently diverse and sustainable house-building sector, and, at the same time as bringing about an inspiring urban living environment, it would also uphold social equity.


In recent years Western academics researching urban issues have become more and more interested in Asian cities, with their variety and complicated community structure. These are the realities of our cities. A progressive mindset and cultural viewpoint and respect for social changes and diversity are essential in formulating policies that match changes in the natural and social environment and respond to living realities.


Shane Lee is a master’s student and Liu Ke-chiang a professor in the Graduate Institute of Building and Planning at National Taiwan University. Both are members of the organizing committee of the Social Housing Research Center.


Reference: http://www.taipeitimes.com/News/editorials/archives/2010/05/01/2003471919/2