Taipei Times (TT): What do you think of the government’s recent efforts to rein in soaring housing prices? Do you think that its measures are effective?
Chang Chin-oh (張金鶚): I am not feeling too positive about what they are doing now. I don’t think the government truly intended to put rising real estate prices in check. They think that the property market is the backbone of the economy, so they would feel justified in keeping up housing prices. The government thinks that the entire economy will collapse if it doesn’t support the real estate market.
Also, some developers have complained that the government is trying to suppress the property market when the economy has yet to fully recover. Under such pressure, the government doesn’t dare let housing prices go down too much.
PHOTO: WANG LIANG-YUN, TAIPEI TIMES
Another reason is that in Taiwanese culture, owning a property means owning a fortune. As a result, most Taiwanese buy houses for their own use. This leads the government to argue that if property prices decline, the value of the public’s assets will also contract. Based on this, I don’t think that the government will tighten credit too tightly as construction companies will continue to keep pressure on policymakers.
TT: In your opinion, what are the main factors that are causing the unreasonably high housing prices?
Chang: Houses are becoming an investment tool for speculation rather than a product for residential consumption in Taiwan. The entire real estate market is replete with speculation, and information on property prices is not transparent.
Worse still, an unfair housing taxation system makes the real estate market an even easier investment environment for speculators. Past experience has shown that the local property market is not effectively functional because it takes a much longer time to recover than it does to contract, which is the opposite of what happens in Europe and the US.
TT: Recently, the government has proposed building affordable residential units in the suburbs of Taipei City for young adults, hoping to help them purchase homes. How do you view this project?
Chang: In my opinion, this policy is completely inappropriate. It will do no good for young adults because they should not buy houses when housing prices are relatively high. Also, they should not buy houses for the sake of preferential mortgage packages as they may enjoy lower interest payments now, but suffer from reduced property values in the future.
The government should not encourage young adults to buy houses, but instead, it should take care of the disadvantaged population first. The entire issue is very tricky. On the surface, the government appears to help youngsters buy homes, but in reality, it is securing the interests of developers. I think the invisible hand behind [this] is very dangerous. The measure is completely politically charged.
TT: Are there any alternative ways for the government to help those who cannot afford to buy a home except for offering lower-priced public housing?
Chang: Public rental housing is important, especially in metropolitan cities. The government should ensure that disadvantaged people are able to live in places with high property prices. In so doing, the government can not only effectively use its limited resources, but also prevent property speculation. This is why I’m opposed to the government putting state-owned land up for auction.
In advanced countries, nearly 40 percent of houses are rental properties, while only 20 percent of housing in Taiwan is rental property. Many people are forced to buy houses because they cannot find good rental houses. However, in European countries, we can see there is a lot of “public housing for rent” made available for low-income residents. So, it is most important for our government to create a favorable rental housing environment for the public, including building public residential units for rent and providing rental subsidies for the disadvantaged.
TT: What are the prospects for Taiwan’s future real estate market following the government’s measures to tighten credit aimed at curbing inflation in the real estate market?
Chang: This will depend on the government’s attitude toward the property market. The central bank might raise the benchmark interest rates later this year as this is a global trend.
We also need to take the elections into consideration. If public opinion is getting stronger, the government must respond. But in the second half of this year, housing prices are likely to see a downward trend. This trend will be even clearer next year, and by that time, there will be more options for home buyers.
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