Sun, Sep 29, 2019 - Page 6 News List

Rental housing must be promoted

By Lee Po-chih 李博志

According to a recent survey by the Directorate-General of Budget, Accounting and Statistics, more than 7.3 million of the 8.6 million households in Taiwan owned their home in 2017, representing a home ownership rate of almost 85 percent.

Taiwan has one of the highest home ownership rates in the world, while social housing accounts for 5 percent, and the trend toward home ownership is increasing. Because of this, Taiwan’s rental market is quite small, about 10 percent.

The high home ownership rate reflects the fact that Taiwanese have not valued renting as a housing choice in the past, and that city governments have not invested enough in rental housing through policy frameworks that generate the belief that owning a house is better than renting one.

It is time for Taiwan to consider increasing the amount of rental housing available.

Generally, there are four myths associated with home ownership:

The first is that in a market economy, real estate is generally a great investment option; it can generate passive income and can be an excellent way to accrue wealth if the value increases over time.

This might be true for some housing investors that bought a home at the right time, in the right place and at the right price.

Investing in hosing is actually much riskier than having a term deposit in a bank.

A study titled “Problems of Home Ownership” published in the Taiwan Review on May 1, 2007, said that house prices fell by 20 percent in Taipei and 50 percent in southern Taiwan following the collapse of the stock market in the spring of 1990.

Only in 2005 did the market begin to move again.

Sinyi Real Estate’s planning and research division said that house prices once again decreased substantially in 2009 and 2016, due to the global financial crisis that began in 2008.

The second myth is that if you want a family you need to buy a home as early as possible.

A recent survey of young women found that the majority of them would like to get married to men who own houses. Being good looking is no longer important. This reflects the real value of home ownership. Many Europeans and Americans share the same idea: Buying a home is considered a cultural rite of passage.

As mentioned before, renting is not valued as a housing choice in Taiwan, so access to more high-quality, affordable rental homes is limited, reinforcing the belief that owning a home is better than renting.

The third myth is that for many people home ownership equals stability, which drives people to buy their own home, even if it creates a precarious financial situation for the household.

Many people regard renting as transitional housing, so buying a home is their ultimate goal, along with graduating from a university or finding work, and they try to buy a home as early as possible.

The final myth is that buying a home provides greater security, more freedom, a financial advantage and therefore more satisfaction.

However, Switzerland offers a counterpoint.

Switzerland has one of the world’s lowest home ownership rates. Statistics from Business Fondue show that the home ownership rate in Switzerland was only 42 percent in 2017, compared with 97 percent for Romania, 91 percent for Singapore, 77 percent for Spain, 65 percent for France, 63 percent for the UK, 58 percent for South Korea and 52 percent for Germany.

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