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.
The narrative surrounding Indian Prime Minister Narendra Modi’s attendance at last week’s Shanghai Cooperation Organization (SCO) summit — where he held hands with Russian President Vladimir Putin and chatted amiably with Chinese President Xi Jinping (習近平) — was widely framed as a signal of Modi distancing himself from the US and edging closer to regional autocrats. It was depicted as Modi reacting to the levying of high US tariffs, burying the hatchet over border disputes with China, and heralding less engagement with the Quadrilateral Security dialogue (Quad) composed of the US, India, Japan and Australia. With Modi in China for the
The Jamestown Foundation last week published an article exposing Beijing’s oil rigs and other potential dual-use platforms in waters near Pratas Island (Dongsha Island, 東沙島). China’s activities there resembled what they did in the East China Sea, inside the exclusive economic zones of Japan and South Korea, as well as with other South China Sea claimants. However, the most surprising element of the report was that the authors’ government contacts and Jamestown’s own evinced little awareness of China’s activities. That Beijing’s testing of Taiwanese (and its allies) situational awareness seemingly went unnoticed strongly suggests the need for more intelligence. Taiwan’s naval
A large part of the discourse about Taiwan as a sovereign, independent nation has centered on conventions of international law and international agreements between outside powers — such as between the US, UK, Russia, the Republic of China (ROC) and Japan at the end of World War II, and between the US and the People’s Republic of China (PRC) since recognition of the PRC as the sole representative of China at the UN. Internationally, the narrative on the PRC and Taiwan has changed considerably since the days of the first term of former president Chen Shui-bian (陳水扁) of the Democratic
A report by the US-based Jamestown Foundation on Tuesday last week warned that China is operating illegal oil drilling inside Taiwan’s exclusive economic zone (EEZ) off the Taiwan-controlled Pratas Island (Dongsha, 東沙群島), marking a sharp escalation in Beijing’s “gray zone” tactics. The report said that, starting in July, state-owned China National Offshore Oil Corp installed 12 permanent or semi-permanent oil rig structures and dozens of associated ships deep inside Taiwan’s EEZ about 48km from the restricted waters of Pratas Island in the northeast of the South China Sea, islands that are home to a Taiwanese garrison. The rigs not only typify
RSS