Public concerns about housing affordability have recently prompted the government to step up its efforts to curb rising property prices. However, the government must know what caused this problem and what it can do about it.
On Thursday, real-estate broker Evertrust Rehouse sounded a warning about the price-income ratio for residential housing, saying that ordinary workers would have to spend 13.38 years of their income to buy a house in one of Taipei’s upscale districts.
Deterred by higher prices in the city’s fashionable Xinyi (信義) and Da-an (大安) districts, more home buyers shifted their focus to suburban Wenshan District (文山) last year. Still, the average worker would still have to spend about nine years of their salary to purchase a home in the suburbs and nearly 7.8 years’ wages to own one in Taipei County, the broker said.
Economists have said that five years’ wages is considered reasonable for most salaried workers, but the swelling prices of luxury residences have fueled an overall rise in property prices in the Taipei area, making it increasingly unrealistic for people to realize their dreams of owning a home in five years.
Meanwhile, a survey conducted by the real-estate transaction information portal Giga House showed that a house in Taipei City cost an average of NT$434,400 (US$13,600) per ping (3.3m²) last year, up 4.27 percent from the previous year, while the average price was about NT$199,400 per ping in Taipei County, up 3.55 percent from 2008.
Worse, the survey also found that aged apartment buildings in Taipei City are often even more expensive than office buildings, mainly owing to the spill-over effects of luxury residences and partly because of the city’s zoning deregulation.
Worst of all are Taipei City’s record land auctions. On Feb. 25, the National Property Administration (NPA) auctioned off a 121.3 ping plot of land on Jianguo S Road in Taipei at NT$6.02 million per ping. It represented the second-highest price per ping for land in the city’s history, after the NPA sold a 116.16 ping piece of land on Renai Road at NT$6.79 million per ping on Jan. 28.
As the record-high public land sales are causing concerns about growing speculative investment in the property market, the government has decided to suspend state-owned land auctions in Taipei, although this move is likely to boost prices for private lots because of the simple rule of supply and demand. For instance, all eyes are now on the scheduled auction of a 1,715 ping plot of land on Tianmu E Road owned by the charity group Evangelize China Fellowship on March 17. The owner has set the floor price at NT$4.97 billion, or NT$2.9 million per ping, but property experts are speculating that the selling price may break the city’s record once again.
Clearly, housing affordability is an issue in Taipei, but not nationally. According to Giga House, price adjustments were rather limited in places elsewhere in Taiwan last year, with the average price per ping rising only 0.34 percent to NT$86,300 in Kaohsiung City and County, and dropping 0.68 percent to NT$119,800 in Taichung City and County.
Therefore, halting public land sales is not enough to contain the rising property prices in the city, as the key issue is too much liquidity in the market, which will require the government adopt effective monetary policies sooner than later. But the bottom line is that the government needs to rethink the nation’s regional development plans and help create more jobs in places outside Taipei. By doing so, people will not have to find a job and a place to live in Taipei.
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