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It’s Time that We Honored the Cheque for Social Housing

icon2017/06/06
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  It’s Time that We Honored the Cheque for Social Housing

China Times Editorial (Taipei, Taiwan, ROC)

  June 1, 2017

 Translation of an Except

The Cabinet recently adopted a draft bill titled the "Statute Governing the Establishment of National Housing and Urban Renewal." Although in the structure of government, there are two misgivings with respect to this extralegal agency and whether it has efficient oversight, it never-the-less underscored the government’s determination to push for social housing policy, which should be applauded. We hope that in the future, the Legislative Yuan will be able to add the relevant norms, dispelling misgivings with regard to its structure, and authorizing the government to accelerate its implementation.

In so far as internationally recognized standards are concerned, if the ratio between housing prices and income is below 3:1, it is a standard considered reasonable and affordable; 5:1, on the other hand, is "extreme burden." In Taiwan, the average is over 9:1, apparently it is a burden impossible to bear. As to the 15:1 in Taipei City, it could be described as “Les Misérables.” In comparison with neighboring countries, with the exception of Hong Kong, which has a ratio of 18:1, higher than Taiwan, Singapore and Japan are both under 5:1.

The two main reasons for the question of Taiwan's high housing prices are: one is that the tax system has always offered extremely favorable treatment to housing speculators. The gains of housing investors are nearly not subject to capital gains tax, allowing housing speculation to become a highly-lucrative business. This loophole was closed in the latter stage of the Ma Ying-jeou government when it adopted a “unified tax system for housing and land”; thus the capital gains in housing investments could be said to be included in the tax network.

The second factor is that over the past decades, the government has not emphasized social housing policy. Taiwan's social housing volume occupies less than 1% of total housing units; it not only couldn’t compare with Germany and other countries where the social housing volume has reached double digits, not even Japan and other countries where there is 5% or so. Although Hong Kong’s ratio between housing prices and income is the highest in the world, the Hong Kong government has been building social housing for the general public, let alone Singapore's famed famous "Housing Development Policy.”

Whether it is Taipei City's "4-year-20,000 units" or the Tsai government's "8-year-200,000 units" policies, they should accelerate the implementation. Moreover, in view of the failure of past national housing policies, social housing should still insist on the principle of “renting but not selling.” Recently, the government has somewhat relaxed its policy to “curb housing prices” on the grounds that the rise in housing prices has slowed down. However, the prosperity or the bursting in the bubble in the housing market may be advantageous to short-term economics; it would cause great harm in the mid- and long-term. High housing prices not only cause alienation of young people toward the establishment, the resulting high rents problem is not fair to industry and services operators, either, the latter being the true provider of employment opportunities and activities helpful to the economy.

 

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