Just weeks before Taiwan is scheduled to implement a luxury tax on June 1 to help suppress real-estate speculation, the government last week said it was considering new plans to help those with low incomes deal with the housing availability problem.
On Wednesday, the Council for Economic Planning and Development (CEPD) said it was planning a low-cost “modern housing” program to assist low-income families in buying their own homes so they won’t have to be lifelong renters.
Then, on Thursday, the Cabinet said it was considering expanding a preferential home mortgage program for first-time homebuyers between the ages of 20 and 45. It also said each eligible homebuyer would be able to apply for up to NT$7.2 million (US$251,748) in loans, up from the previous NT$5 million, with the repayment period likely extending to 30 years from the original 20 years.
Some people called the new plans good complementary measures to the luxury tax, saying that the introduction of the luxury tax has stifled the housing market even before its implementation. It is hard to predict the effectiveness of the new plans at this point in time, but it looks suspiciously like the government made the move out of political considerations ahead of the presidential and legislative elections on Jan. 14.
The CEPD claimed its “modern housing” program was different from other government-sponsored programs such as the Ministry of the Interior’s “social housing,” saying its program could allow homebuyers to own the property for a period of up to 70 years. In contrast, “social housing” consists of apartments rented out to the poor, the elderly and minority groups.
No matter what these government-initiated housing programs are called and how they are built and sold, they are all forms of public housing, aiming to introduce a limited supply of low-cost housing to meet the needs of certain homebuyers, especially those with a low income or those who have never owned a house.
Because they remain public housing projects, they still face the same problem of a long-term negative perception about public housing complexes, which tend to be associated with problems such as inferior construction quality and poor public safety. Since the number of these low-cost housing units is limited, they are not likely to make any meaningful impact on the housing market, which means these programs will not help bring down excessive home prices in urban areas, nor make purchasing a house any easier.
Worse, because housing prices remain high, the government’s revised preferential home mortgage program for young people will just encourage more first-time homebuyers to buy houses and burden themselves with a life-long mortgage. Under either the 20-year home loan program or the 30-year one, would-be homebuyers may end up sacrificing their own quality of life, as they will have to make mortgage payments the most important priority in their life.
The government’s efforts to deal with the housing problem are welcome, but it is immoral and most undesirable to let first-time homebuyers, especially young people, play a major role in supporting the housing market. Instead of coming up with rash policies, the government needs to change its mindset about housing and educate the public to redefine their priorities in life, because like it or not, high housing prices are not likely to fall substantially any time soon unless the market were to crash.