The Cabinet’s recent move to halt state-owned land auctions in Taipei City over concerns that the bidding would fuel the already overheated property market drew mixed reactions from realtors and academics.
Chen Tain-jy (陳添枝), an economics professor at National Taiwan University and former chairman of the Council for Economic Planning and Development, yesterday expressed support for the government’s “appropriate control” over the sale of publicly owned land.
“Based on the economic principles, however, the Cabinet’s decision to suspend public land auctions will decrease supply and therefore raise property prices,” Chen told reporters on the sidelines of a seminar in Taipei yesterday.
On Tuesday, Premier Wu Den-yih (吳敦義) put a halt to the National Property Administration’s (NPA) plan to invite bids on state-owned land at an auction originally scheduled for next Thursday, in an effort to prevent price gouging among construction companies.
Chen said the root cause of soaring property prices in Taipei was excessive floating capital, adding that the suspension of public land auctions would not solve the fundamental problem.
“One of the ways to reduce floating capital in the market is for banks to strengthen their credit controls and adopt a holistic method to squeeze credit,” he said, refusing to comment on whether the central bank should raise interest rates.
Jessica Hsu (徐佳馨), spokeswoman for HB Housing (住商不動產), shared the professor’s view, saying in a statement that insufficient residential homes in Taipei was chiefly to blame for skyrocketing real estate prices.
Citing government data, Hsu said out of 968,748 households in Taipei, there are only 892,400 residential units, a discrepancy of 76,348.
Chang Chin-oh (張金鶚), land economics professor at National Chengchi University, however, said that soaring property prices were not a result of an imbalance between supply and demand.
Chen attributed the price increases to capital repatriation because of reduced inheritance and gift taxes, opaque real estate information and the fact that most job opportunities are concentrated in Taipei.
While supporting the government’s measure to halt public land auctions, Chang said that it is more important for the government to tighten monetary policy.
“If the government wishes to put a stop to soaring property prices, it must get to the bottom of the problem,” Chang said.
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