Recent media reports have stressed the urgency of addressing high property prices, especially in Taipei, where prices have risen so quickly that few in our younger generation are able to purchase a property in the city.
According to an April 16 survey released by the Construction and Planning Agency, the average price-to-income ratio was 15.01 in Taipei in the final quarter of last year and 12.67 for New Taipei City. That means it would take about 15 years of an ordinary family’s income to buy a house in the capital, assuming the family did not eat or drink or spend money on anything but the house and nearly 13 years on average for households in New Taipei City.
The survey also indicates that the Greater Taipei area has become one of the most unaffordable places to buy a property in the nation, as a mortgage accounted for 63.37 percent of household income in Taipei in the fourth quarter of last year and 53.51 percent in New Taipei, while a commonly accepted average is about 30 percent.
The results of the survey have raised eyebrows among government officials, prompting Premier Jiang Yi-huah (江宜樺) to vow to reduce the average price-to-income ratio in the Greater Taipei area to 10 in two years and Taipei Deputy Mayor Chang Chin-oh (張金鶚) to say he wanted to bring down home prices in the capital by 30 percent in two years.
Last week, lawmakers on the legislature’s Finance Committee moved quickly to approve a proposal to raise taxes on homes that owners do not live in to between 1.5 percent and 3.6 percent, from the current range of between 1.2 percent and 2 percent. Implementation of the new rates could take effect as soon as May next year, if the proposed amendment to the House Tax Act (房屋稅條例) clears the legislative floor this year.
Unfortunately, such a tax hike would only have a limited impact on the housing market, because the housing taxes are based on the government-set “current assessed housing value,” which is often much lower than the market value. Based on the Ministry of Finance’s estimates, the new policy might just increase the tax burden for each household by an average of NT$4,050 a year. Even though the number could reach as high as NT$120,000 for luxury housing in Taipei’s upscale Xinyi District (信義), it will not bother luxury housing buyers and investors with deep pockets.
Jiang’s wish to see average price-to-income ratio drop to 10 also looks difficult to achieve, because that would require either a tumble of more than 30 percent in house prices or household income to increase by 50 percent, according to estimates by the Taipei Association of Real Estate Brokers.
Actually, prices are unlikely to drop 30 percent in the next couple of years as long as the imbalance of supply and demand remains in Taipei, and if the conditions of low interest rates and still-strong market liquidity continue. However even if prices do drop by that much, it would invite concern that the banks could withstand such a crisis. Moreover, as real-term salaries have not returned to their level of 15 years ago, it is highly unlikely to see household income increase by 50 percent in the next two years.
Without a plan to introduce a property transaction income tax, or a capital gains tax on the sale of land and houses based on market value and if interest rates remain low, it is impossible to bring down housing prices or lure money away from the housing market into other segments of the economy. As such, government actions are just a reminder that we still have a long way to go to achieve housing justice in this nation.
The Chinese Communist Party (CCP) continues to bully Taiwan by conducting military drills extremely close to Taiwan in late May 2024 and announcing a legal opinion in June on how they would treat “Taiwan Independence diehards” according to the PRC’s Criminal Code. This article will describe how China’s Anaconda Strategy of psychological and legal asphyxiation is employed. The CCP’s People’s Liberation Army (PLA) and Chinese Coast Guard (CCG) conducted a “punishment military exercise” against Taiwan called “Joint Sword 2024A” from 23-24 May 2024, just three days after President William Lai (賴清德) of the Democratic Progressive Party (DPP) was sworn in and
Former US president Donald Trump’s comments that Taiwan hollowed out the US semiconductor industry are incorrect. That misunderstanding could impact the future of one of the world’s most important relationships and end up aiding China at a time it is working hard to push its own tech sector to catch up. “Taiwan took our chip business from us,” the returnee US presidential contender told Bloomberg Businessweek in an interview published this week. The remarks came after the Republican nominee was asked whether he would defend Taiwan against China. It is not the first time he has said this about the nation’s
In a recent interview with the Malaysian Chinese-language newspaper Sin Chew Daily, former president Ma Ying-jeou (馬英九) called President William Lai (賴清德) “naive.” As always with Ma, one must first deconstruct what he is saying to fully understand the parallel universe he insists on defending. Who is being “naive,” Lai or Ma? The quickest way is to confront Ma with a series of pointed questions that force him to take clear stands on the complex issues involved and prevent him from his usual ramblings. Regarding China and Taiwan, the media should first begin with questions like these: “Did the Chinese Nationalist Party (KMT)
The Yomiuri Shimbun, the newspaper with the largest daily circulation in Japan, on Thursday last week published an article saying that an unidentified high-ranking Japanese official openly spoke of an analysis that the Chinese People’s Liberation Army (PLA) needs less than a week, not a month, to invade Taiwan with its amphibious forces. Reportedly, Japanese Prime Minister Fumio Kishida has already been advised of the analysis, which was based on the PLA’s military exercises last summer. A Yomiuri analysis of unclassified satellite photographs confirmed that the PLA has already begun necessary base repairs and maintenance, and is conducting amphibious operation exercises