It has been 11 years since housing prices began to surge in 2010. Despite the high prices, the home ownership rate remains high: Data from the Directorate-General of Budget, Accounting and Statistics showed that the rate has remained stable at 84 to 85 percent for many years.
At the same time, home ownership is facing two major problems: On the one hand, the high housing prices have become a heavy financial burden for homeowners, and on the other, 25 percent of all housing units are owned by people who own three or more homes.
How heavy is the financial burden? Ministry of the Interior statistics suggest that home ownership is affordable if mortgage payments make up less than 30 percent of a household’s monthly income.
In the third quarter last year, the national average was 36.76 percent, meaning housing affordability is low.
The mortgage burden was highest in Taipei at 61.14 percent, followed by 48.63 percent in New Taipei City and 39.91 percent in Taichung.
The combined population of these three municipalities is 9.45 million, accounting for two-fifths of the nation’s total population, highlighting the extent of the heavy financial burden.
The mortgage burden is less than 30 percent in only eight of Taiwan’s 22 cities and counties — Miaoli, Yunlin, Chiayi, Pingtung and Penghu counties and the cities of Keelung, Hsinchu and Chiayi, which have an aggregate population of 3.72 million.
In terms of home ownership concentration, a news release by the Taxation Administration in November last year said that about 8 million Taiwanese own real estate, of which at least 774,000 people own three or more housing units, making up 9.7 percent of the total number of homeowners.
Although this is less than 10 percent, it translates into at least 2.6 million homes, or one-quarter of the nation’s self-owned properties.
The government has a legitimate reason for coming up with a policy to increase taxes significantly for people owning three or more homes. If that drives these owners to sell 10 percent of these properties, 260,000 more units would become available on the market, and this sharp increase in supply would cause real-estate prices to fall.
When real-estate affordability is low, married couples might be reluctant to have children.
Government data showed that the number of deaths exceeded the number of births for the first time last year, as the population decreased by 42,000 since 2019, marking the beginning of negative population growth in Taiwan.
The Executive Yuan’s National Land Plan, updated on April 30, 2018, projected that negative growth would occur after the population peaks at 23.74 million in 2024.
Instead, it peaked four years earlier, at 180,000 people fewer than projected.
Things have clearly been changing faster than the government expected.
Theoretically, a decline in population should lead to falling housing prices, but property developers have continued to launch new housing projects, and housing prices have continued to rise.
It might be difficult to remedy this long-festering problem in the short term, but hopefully the government will be able to initiate a wide-ranging and in-depth crackdown on housing speculation and accumulation, and win public praise by curbing housing prices.
Wang Juei-hsing is a former chief of the Taiwan Provincial Government’s Land Development Division.
Translated by Eddy Chang
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