The Directorate-General of Budget, Accounting and Statistics (DGBAS) has published two important surveys: the Gross National Happiness Index and the National Wealth Statistics. The former indicated that the public’s happiness is the best in Asia, surpassing Japan and South Korea, while the wealth statistics showed that everyone is getting richer. On the surface, these are exciting, positive messages, but behind them is a flawed property market that leaves a bitter taste.
The key to the surveys is that property prices have increased sharply in recent years, indicating an increase in asset values and peoples’ wealth. Looking at the happiness index, the absurd conclusion could be drawn that happiness among Taiwanese has increased because property prices have risen more than in Japan and South Korea while incomes have not gone up.
The DGBAS emphasizes that because 85 percent of households nationally own their own property and the average value of each property is more than NT$10 million (US$305,110), everybody is a multimillionaire.
Looking at it like that, they would seem to be wealthy, happy households; but what does the public actually feel? If property prices rise unreasonably, then everyone will be wealthier and happier, so should the government have a policy to encourage rises in property prices? Is everyone going to be happier like that?
With the structure of property ownership, more than 60 percent of households own one property and about 20 percent own two or more. However, about 20 percent of households own no property and rent their accommodation.
For the vast majority of households who own just one property, if property prices rise, their assets increase in value. However, they still need to live in their only property. Not only can they not earn money from it, they have to pay higher property and land taxes, and other costs of ownership, so their life is not necessarily any happier. If they want to buy another property to raise their standard of living, they find that selling their old house does not enable them to buy a new one as properties decrease in value with age. They can only continue to live in their increasingly dilapidated property. Is their life any happier?
As for the people who do not own property, the rise in property prices means they can only look at housing and sigh. That kind of hopelessness is, presumably, not happiness.
It is obvious that only the people with more than one property can sell the homes they do not live in without affecting their life; so that must make them happier.
Does an unreasonable rise in property prices increase happiness or create unhappiness? Logic dictates that when property prices do not change in step with incomes and economic growth, but rise unreasonably, it only benefits those with multiple homes or investors. It only raises happiness levels for a small number of people, while it deprives the majority.
The surveys should prompt some introspection as the public considers exactly what they have gained through rising property prices and the commercialization of property, as well as what has been lost.
Michael Sandel’s book What Money Can’t Buy: The Moral Limits of Markets shows examples of this kind of situation. Is the happiness obtained from living in a property something that money cannot buy? Do people want to use rising property prices to support an illusion of happiness?
The purpose of property is for it to be inhabited; lived in. Any money earned from the investment is incidental. When a small number of investors make money and push out the majority, it should not be those who want to earn as much money as possible who come first, while those who want the happiness of living in their own property are disadvantaged.
In the face of high prices and a possible slump in the housing market, there are those who want to buy property so that they will be happy in the future. They want to buy a place to live in, but their resources are not sufficient and they struggle to buy property. Are they going to be happy?
There are also those who want to buy property to make money. They borrow money from family, friends and banks to gamble on property. Will they be happier in the future? Perhaps the two groups should reconsider their plans.
Chang Chin-oh is a professor of land economics at National Chengchi University.
Translated by Clare Lear
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