Asia-Pacific Networks for Housing Research Newletter, July 2014
Housing affordability has been a major concern for many people in Taiwan, especially young people. The most recent data from the Ministry of Interior shows that the housing price to income ratio is 15.01 in Taipei City, which is higher than that of Hong Kong and Vancouver. The government has been very slow to take effective actions to cool down the housing market, such as the tax reform to increase the property tax and the tax on the capital gains based on the housing sale. One reason is that many legislators represent the interests of real estate developers, so tax reform is very difficult. The social discontents on the skyrocketing housing prices are strong, and they continue to be a political request for the forthcoming elections for mayors and president. Some tax reforms will be enacted in the future if the social pressure persists. At this moment, the central bank of Taiwan is trying to tighten the mortgages available for home investors, though the effect is not as powerful as the tax reform can be.
The social housing movement started in Taiwan in 2010. Social housing means the houses owned by the public and are primarily rentals. This is a new idea because most of the government-constructed housing has been sold to the buyers in subsidized prices, so the number of social rental housing is very tiny. Only about 0.08% of housing stock is qualified as social rental housing. The idea of social housing was proposed by the housing movement and it immediately received wide social support. However, the government has been very reluctant to provide social housing. The major reason is that, being a productivist welfare state, welfare provision in Taiwan has been based on the concern of stimulating economic development. Social rental housing is considered as a heavy financial burden and extra work of management for the government. Therefore, the government prefers to use incentives to invite private developers to build social housing by providing public land and extra floor space.
To ensure the profits of developers, the rental housing available for low-income people is very limited. This process also left a grey area for making deals, so corruption is a problem. The former director of the Ministry of Planning and Construction was recently caught receiving a bribe from the biggest developer in one of the social housing projects. On the other hand, social housing is targeted at young people, so, again, the available units for poor people are very tiny.
There are three methods proposed by the social housing movement and some housing scholars to reform the housing system— housing tax reform, social rental housing, and facilitation of rental housing market. To implement these methods, there needs to be a strong commitment from the government, which is elected by the people. The future elections of politicians in different levels of government will decide whether or not the housing system will hasten inequality.
Global and Area Studies/ Geography,
University of Wyoming, USA