The central bank on Friday invited major local banks that handle mortgages to discuss issues such as the real-estate business outlook and credit risk controls for house and land purchases.
The initiative comes at a time when increased property speculation has raised eyebrows and various ministries are drafting new policies to curb speculative investment in real estate.
During the meeting, the central bank urged lenders to strictly review loan conditions, improve risk control, monitor the use of funds and enhance post-loan management. It also said that it would continue to pay attention to the real-estate market and banks’ credit risk, as the sound development of the property market is closely related to the nation’s financial stability — a message that suggested that the central bank might discuss whether to offer selective credit controls at its next quarterly policymaking meeting at the earliest.
Taiwan’s real-estate market has since June been gradually recovering from the impact of the COVID-19 pandemic, thanks to the nation’s effective control of the outbreak, a low interest rate environment and high market liquidity.
Even though it remains uncertain whether the market will boom in the near term, there is no doubt that housing prices in major cities are already so high that housing is one of the major issues that young people face, in addition to low wages and a bleak future.
Over the past few decades, the government has adopted numerous housing and tax reforms to slow the increase of real-estate prices, as policymakers recognized that the rise in prices might pose a problem not just for young people, but also for the nation’s long-term economic development and competitiveness.
However, the problem, first highlighted by the landmark Snails Without Shells movement in 1989, has never been solved. Ironically, despite the nation’s declining birthrate, developers and builders still continue to launch new housing projects, which has caused the number of vacant houses to rise.
However, should housing prices not have started to decline long ago if they were subject to the laws of supply and demand? To those who call on the government to respect the mechanism of the free market, skeptical of any government intervention, how are the persistently rising housing prices and the increasing number of construction projects reasonable?
People in Taiwan know that it is important to establish a healthy housing market, develop a sound rental market and provide more public housing to address the issue. The problem is that property owners generally do not want the government to regulate the rental market, and most people do not welcome any plans to build public housing in their neighborhood.
On the other hand, public land in urban areas is becoming increasingly scarce, making plots for public housing development difficult to find.
Past housing and tax reform measures have proved ineffective, and, in some cases, have generated adverse effects or encouraged tax evasion.
Regardless of what actions the government might take to deal with the issue, every move, including the central bank’s meeting with major mortgage operators, reflects the urgency and severity of the problem.
It also brings to light a persistent social discontent that keeps pushing policymakers to act.
If the government cannot make everyone rich enough to buy a home, it should at least work toward building a society in which resources are distributed more evenly.
The government should make efforts to narrow the gap between urban and rural areas, allowing everyone to enjoy the same convenience no matter where they live, and encourage people to pursue careers in their hometowns instead of moving to the big cities — measures that could offer an alternative to addressing the nation’s housing issue.
Taiwan is not an orphan nation in need of someone to adopt it. Taiwan is not a foundling nation wandering the streets of the world looking for a home. It is not even a poor waif of a nation unable to take care of itself in that same big, bad world. Finally, Taiwan is certainly not terra nullius, a nationless land that is open and waiting to be explored and possessed by those who dare. Taiwan is a mid-sized, democratic nation that by GDP, profitability, location and even microchip production punches far above its weight in its region and in international commerce.
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