Recent media reports have stressed the urgency of addressing high property prices, especially in Taipei, where prices have risen so quickly that few in our younger generation are able to purchase a property in the city.
According to an April 16 survey released by the Construction and Planning Agency, the average price-to-income ratio was 15.01 in Taipei in the final quarter of last year and 12.67 for New Taipei City. That means it would take about 15 years of an ordinary family’s income to buy a house in the capital, assuming the family did not eat or drink or spend money on anything but the house and nearly 13 years on average for households in New Taipei City.
The survey also indicates that the Greater Taipei area has become one of the most unaffordable places to buy a property in the nation, as a mortgage accounted for 63.37 percent of household income in Taipei in the fourth quarter of last year and 53.51 percent in New Taipei, while a commonly accepted average is about 30 percent.
The results of the survey have raised eyebrows among government officials, prompting Premier Jiang Yi-huah (江宜樺) to vow to reduce the average price-to-income ratio in the Greater Taipei area to 10 in two years and Taipei Deputy Mayor Chang Chin-oh (張金鶚) to say he wanted to bring down home prices in the capital by 30 percent in two years.
Last week, lawmakers on the legislature’s Finance Committee moved quickly to approve a proposal to raise taxes on homes that owners do not live in to between 1.5 percent and 3.6 percent, from the current range of between 1.2 percent and 2 percent. Implementation of the new rates could take effect as soon as May next year, if the proposed amendment to the House Tax Act (房屋稅條例) clears the legislative floor this year.
Unfortunately, such a tax hike would only have a limited impact on the housing market, because the housing taxes are based on the government-set “current assessed housing value,” which is often much lower than the market value. Based on the Ministry of Finance’s estimates, the new policy might just increase the tax burden for each household by an average of NT$4,050 a year. Even though the number could reach as high as NT$120,000 for luxury housing in Taipei’s upscale Xinyi District (信義), it will not bother luxury housing buyers and investors with deep pockets.
Jiang’s wish to see average price-to-income ratio drop to 10 also looks difficult to achieve, because that would require either a tumble of more than 30 percent in house prices or household income to increase by 50 percent, according to estimates by the Taipei Association of Real Estate Brokers.
Actually, prices are unlikely to drop 30 percent in the next couple of years as long as the imbalance of supply and demand remains in Taipei, and if the conditions of low interest rates and still-strong market liquidity continue. However even if prices do drop by that much, it would invite concern that the banks could withstand such a crisis. Moreover, as real-term salaries have not returned to their level of 15 years ago, it is highly unlikely to see household income increase by 50 percent in the next two years.
Without a plan to introduce a property transaction income tax, or a capital gains tax on the sale of land and houses based on market value and if interest rates remain low, it is impossible to bring down housing prices or lure money away from the housing market into other segments of the economy. As such, government actions are just a reminder that we still have a long way to go to achieve housing justice in this nation.
In their New York Times bestseller How Democracies Die, Harvard political scientists Steven Levitsky and Daniel Ziblatt said that democracies today “may die at the hands not of generals but of elected leaders. Many government efforts to subvert democracy are ‘legal,’ in the sense that they are approved by the legislature or accepted by the courts. They may even be portrayed as efforts to improve democracy — making the judiciary more efficient, combating corruption, or cleaning up the electoral process.” Moreover, the two authors observe that those who denounce such legal threats to democracy are often “dismissed as exaggerating or
The Chinese Nationalist Party (KMT) caucus in the Legislative Yuan has made an internal decision to freeze NT$1.8 billion (US$54.7 million) of the indigenous submarine project’s NT$2 billion budget. This means that up to 90 percent of the budget cannot be utilized. It would only be accessible if the legislature agrees to lift the freeze sometime in the future. However, for Taiwan to construct its own submarines, it must rely on foreign support for several key pieces of equipment and technology. These foreign supporters would also be forced to endure significant pressure, infiltration and influence from Beijing. In other words,
“I compare the Communist Party to my mother,” sings a student at a boarding school in a Tibetan region of China’s Qinghai province. “If faith has a color,” others at a different school sing, “it would surely be Chinese red.” In a major story for the New York Times this month, Chris Buckley wrote about the forced placement of hundreds of thousands of Tibetan children in boarding schools, where many suffer physical and psychological abuse. Separating these children from their families, the Chinese Communist Party (CCP) aims to substitute itself for their parents and for their religion. Buckley’s reporting is
Last week, the Chinese Nationalist Party (KMT) and the Taiwan People’s Party (TPP), together holding more than half of the legislative seats, cut about NT$94 billion (US$2.85 billion) from the yearly budget. The cuts include 60 percent of the government’s advertising budget, 10 percent of administrative expenses, 3 percent of the military budget, and 60 percent of the international travel, overseas education and training allowances. In addition, the two parties have proposed freezing the budgets of many ministries and departments, including NT$1.8 billion from the Ministry of National Defense’s Indigenous Defense Submarine program — 90 percent of the program’s proposed
RSS