Police on Tuesday warned the public about the danger of real-estate scams, citing the case of a man who lost tens of millions of New Taiwan dollars in a fraudulent housing transaction.
High real-estate prices in northern Taiwan mean the market is highly susceptible to criminal activity, with frequent occurrences of improperly issued building permits, poorly built structures that do not meet the building code and price-gouging, among other problems. Buildings that fail structural integrity assessments cannot even be rebuilt without the consent of all residents, and often there are some who are simply unwilling to relocate temporarily during reconstruction.
Of equal concern is the inaccessibility of the market to new graduates, many of whom find themselves with 30-year mortgages, if they are even able to secure the high down payments.
Part of the problem is that people tend to hold on to old properties and keep them within the family, rather than resell, and investors often buy multiple properties, leaving many units unoccupied.
Then there is the problem of wealthy foreign investors, including Chinese, who were found four years ago to have been purchasing units in downtown Taipei by diverting funds through offshore accounts.
In March last year, Minister of the Interior Yeh Jiunn-rong (葉俊榮) went as far as to tell the nation’s youth to abandon the idea of owning property altogether.
High prices and low salaries mean a young person would need to pay two-thirds of their income toward a mortgage, well above the 30 percent that is considered affordable for housing, Yeh said at the time.
Unfortunately even renting in Taipei and the surrounding areas has become unaffordable for many, with large numbers of new graduates sharing apartments with others. This makes it difficult for people to start families, and also adds an additional layer of stress for workers unable to come home to a quiet apartment after finishing a long shift with overtime.
The Taipei City Government has tried to address this by investing in public housing, with rent subsidies from NT$3,000 to NT$11,300 depending on household income.
However, can people be convinced to abandon hopes of home ownership and be content with perpetually renting property? Landlords in Taiwan can force eviction if they claim to want the property back for personal use, meaning there is no real sense of security for tenants. There is also the issue of tradition when it comes to marriage: Families are likely to doubt a man’s financial ability to care for their daughter if he is unable to purchase a family home.
Such financial concerns might cause many young people to put off marriage, which will only serve to further exacerbate the nation’s aging population problem. People might also be less motivated in their careers without home ownership as a long-term goal.
A better solution would be to follow Singapore’s model, where about 90 percent of the population are homeowners thanks to a program overseen by the government-run Housing and Development Board. Homes are purchased through the board at about 25 percent less than market value, and people can afford mortgage payments due to a mandatory savings program that employers are required to contribute to.
The program is also designed in a way that does not burden taxpayers, costing the government less than 3 percent of the annual national budget.
There are some caveats, such as 99-year limits on leases, and a requirement for units to be occupied by couples or families, but this is done to encourage best use of limited land and to promote family values.
Taiwan should stop allowing home ownership to be a privilege for the rich and instead allow it to be a realistic goal for the nation’s youth. Achieving this aim might solve the nation’s housing problems, its aging population and its brain drain all in one go.
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