Wed, Oct 18, 2017 - Page 8 News List

[ LETTER ]

Offering affordable housing

I found Yaung Chih-liang’s (楊志良) opinion piece (“More kids require higher incomes,” Oct. 14, page 8) unusually illuminating, but some pieces of the jigsaw puzzle he presents are, in my view, missing.

I will hasten to say that I looked for the most important pieces in various government Web sites and came out empty-handed. In particular I have not found Taiwanese data in relation to wealth or income of the family of women and the number of children they bear in their lifetime; such data could make the thesis the minister proposes either much more likely or much less likely.

One hyperbole by the minister or the translator should be challenged. The article states: “In one generation’s time, Taiwan’s population will have halved.”

If we assume that “one generation” means 30 years, the population then of people under 30 might be half of what it is now, but the population then of people between 31 and 90 would be a lot more than half what it is now.

The “medium variant” projection of population that used to be available from the Ministry of the Interior Web site has the population aged 30 or less at 4,078,147 in 2060 compared with 8,092,305 last year; a 50 percent reduction. However, the population over age 30 is 14,524,165 in 2060 compared with 15,453,641; a 7 percent reduction.

The projected reduction in the total population over the 44-year period would be about 9 percent.

However, although the number is exaggerated, the point that continued reduction in the population at the rate experienced in the recent past would be catastrophic in the not-so-remote future.

The main point that needs to be made is that the relationship between the cost of a home to income is not the only one that needs to be considered.

The relationship between age of the owner and age of the structure owned is also important, and factors that affect that relationship are part of the picture.

If you buy a house for NT$100,000 per ping (33.1m2) and later sell it for NT$200,000 per ping you are ahead NT$100,000 per ping if there is no tax on the gain and you no longer need housing. If you are still alive, then it depends on what the market price per ping is after the sale and the number of pings you need.

If the market price has doubled, making your sale at the market price, you are not ahead, and if there is any tax on the gain, you are behind. In countries with heavy taxes on the profit, people who amass wealth cannot make money that way, so they keep their houses; the only old houses young people can buy are those of owners who have died.

Young people have to buy the constructed houses and those are often beyond their means. That is typical in Europe.

The US tax code effectively subsidizes the purchase of new houses so when people gain wealth they can sell their house, buy a bigger, better, or newer house, getting a mortgage at 5 percent or so for most of the price, if necessary, and free up an older, less expensive house for younger people to buy.

It is not difficult to see, if you have data on the age of houses and their owners, to get a good picture of what is going on.

In Europe, there have been periods when young people just could not afford housing. I remember a story from Rome: In about 1950, a couple was arrested in a raid in an illegal house of prostitution. They were legally married, but that was the only lodging they could afford.

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