With Taiwan’s housing situation more chaotic than ever before, a far-reaching, coordinated public housing policy is long overdue.
As the cost of homes built by private contractors in high-end districts has skyrocketed, and increasingly expensive residential units everywhere have led to social problems, the government has reinstituted the sale of state-sponsored housing, known as “citizens’ housing.”
The National Property Administration under the Ministry of Finance also recently announced it will take bids for the right to build on three plots of public land in Taipei’s Neihu and Da-an districts, to be developed into rental apartments for the elderly, students and the general public, subject to rent control.
The MOF’s policy is to be commended, especially the measure to rent rather than sell the residences. Yet this cannot be all there is to the government’s housing policy.
Almost all of Taiwan’s homes are privately built, and there has never been an actual national housing policy. For citizens’ housing, the government found land, built apartments and then sold them to people meeting certain qualifications.
This procedure led to numerous problems—government construction resulted in poor quality buildings, and the sale of the houses meant the state had to keep looking for suitable plots of land, which eventually became few and far between. So although those who purchased such residences benefited from the lower prices, citizens’ housing was doomed to become history.
In the last 20 years, in response to rising prices, the government has provided financial aid to homebuyers. To prop up the real estate sector and the economy, it has encouraged the public to buy houses through special mortgages for first-time purchasers, subsidies for low- to middle-income families and preferential loans to young couples. These programs do not constitute an overall housing policy, however; at most they are stopgap measures.
A survey of policies in other countries shows that even in thoroughly capitalist, market-economy countries, governments intervene in the housing market. This is because homes are not simply merchandise that can be provided entirely by private sources, with their cost to be determined by market forces.
When dwellings are seen purely as a product for sale, open to speculation, prices rapidly rise and social turmoil results. Thus depending on national conditions, governments around the world set housing policies and enter the market directly, with rentals or sales.
Singapore, similar to Taiwan with its ethnic Chinese majority and traditional concept of land as wealth, has not experienced social troubles resulting from expensive housing. This is primarily because its Housing & Development Board has provided dwellings for nearly 90 percent of the population, and low-income families can rent specially built homes.
In Hong Kong, despite the general impression that real estate prices are sky high, due to the government’s longstanding policy, almost half of the region’s people live in public housing, with low-income families renting from the government.
While real estate speculation may appear to have been rampant in the U.K. during the financial tsunami, the government has continued to provide residences for those in lower income brackets, with 20 percent of the population renting council housing.
In Germany the state provides high quality homes at low rental rates. Once the renters’ income surpasses a certain standard, they must move out or pay rent at the current market level. The Swedish government invests directly in the construction of public housing, while in Japan government agencies have provided low-cost apartments for those in need.
Taiwan’s government should gradually increase the supply of affordable residences. Given that the past sale of citizens’ housing led to government inability to respond to further demand, future policy must be based on rentals, rather than sales. This approach could begin now with the 4,000 budget residences planned by the Executive Yuan near the Taiwan Taoyuan International Airport mass transit system. (THN)
(This commentary originally appeared in the China Times Sept. 7.)
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