8/26 (Tue.) About housing price (Host: David Jr.)

[David Jr.]

My dear yoyo members,
On next Tuesday we are going to talk about a realistic topic about buying a house in Taiwan ( or especially in Taipei.) A house could be the single biggest expense of a person's entire life, and this deserves discussion, especially owning a house is still many people's "dream." Welcome to the meeting with us on Tuesday(8/26)

Video 1:
Taiwan's high property prices pressure youth


Video 2:
Finance minister warns of potential property bubble in Taiwan


Article 1:
How to address Taipei’s soaring house prices
http://www.taiwantoday.tw/ct.asp?xitem= ... CtNode=426
Publication Date：05/04/2014
Source： Economic Daily News

ROC Minister of Finance Chang Sheng-ford and Taipei City Deputy Mayor Chang Chin-e met recently to discuss how to deal with Taipei City’s soaring house prices, bringing the subject back to the public’s attention.

According to transaction figures released by the Ministry of the Interior, units in the city’s most sought-after location, The Palace on Renai Road, are changing hands for almost NT$1 million (US$33,000) per square meter. Average apartment prices are 15 times average incomes, higher than in Hong Kong and Singapore, creating public discontent.

With such a high price-earnings ratio, most people cannot afford to buy a home. Even top government officials and politicians have said that an apartment in Taipei is beyond their children’s reach.

Taipei’s housing is very expensive, but the owner-occupancy rate in 2012 was 71.4 percent, and 13.3 percent of units were empty. Although prices are high, many people own multiple properties, causing the high empty property rate. Thus the most direct way to control house prices is to increase short-term transaction and property taxes.

Three years ago, the MOF introduced a so-called luxury tax, imposing 15 percent and 10 percent of tax on properties re-sold within one and two years, respectively. The policy was noticeably effective on short-term transactions that were stoking the market, but it failed to halt property hoarding by wealthy people. As long as property taxes remain low, they can afford hanging onto property for more than two years to avoid the luxury levy.

Hence the focus of current efforts to contain property speculation is moving toward raising the cost of ownership by raising house tax. Every household needs to own an appropriate dwelling, therefore property tax on primary residence should remain at a low 1.2 percent. Also, a family can only live in one place at a time, so ownership of second and further homes is likely to be treated as hoarding and should be subject to a higher tax burden.

These are all necessary and feasible tax policies which should be actively pursued by the government, so that real estate can fulfill its primary function of providing housing for the public, rather than as an investment vehicle.

Since a system for declaring actual real estate transaction prices was launched Aug. 1, 2012 a database of such prices has gradually been built up. Local governments should adjust upward their publically assessed land and property values in line with market values to boost local tax revenues, increase costs for property hoarders, and achieve policy aims of controlling hoarding and reducing prices.

Aside from raising the costs of property ownership, increasing the housing supply is another practical way to control housing prices. Building more low-cost units is not the only means to this end. The amount of land owned by the government is limited, making it impossible to construct massive amounts of public housing.

A more reasonable and pragmatic method is to speed up construction of the mass rapid transit system to broaden Taipei’s commuter catchment area. New Taipei City Government’s proposal of an MRT expansion plan is a possible way forward.

Whether the government aims to stop speculation or return housing prices to a reasonable level, officials must understand the market’s complexity and consider the overall implications of any measures. They must avoid any negative knock-on effect from overly radical measures and hasty implementation.

Premier Jiang Yi-huah said he aims to reduce the price-earnings ratio from 15 to 10 times on his watch, and Chang Chin-e said he would like to reduce prices by 30 percent within two years. This is going from one extreme to the other without considering the impact of a sudden price fall.

Most real estate purchases are made using bank loans. If buyers get a mortgage worth 80 percent of house value, and housing prices fall by 30 percent, they will be left with negative equity and forced to add more collateral. They may further face foreclosure and repossession by the banks, with the property possibly sold off at auction. Once lots of repossessed houses are being auctioned, banks will suffer a liquidity problem and a financial crisis could occur. This is something the government must carefully guard against.

Finally, attacking speculation is a negative response to the problem. A more active approach would be to address the increasing price-earnings ratio by raising incomes. A reason often overlooked by many for Taipei’s high price-earnings ratio is that incomes have stagnated.

Thus, the most fundamental policy response should be to jump-start Taiwan’s economy to attract investment from overseas and create new jobs. It is only in a growing economy that jobs can be created and wages increased. It is then people’s purchasing power can be raised and they can afford to buy property. (SDH)

(This article first appeared in the Economic Daily News April 27, 2014.)

Article 2 (in Chinese)
台灣高房價是戳不破的泡沫？
http://flipermag.com/2014/06/17/high-pr ... al-estate/


Sessioin 1 Questions

1. Do you believe Taiwan's real estate is now experiencing a bubble?
If yes, when will it burst? What's the "fair" or "reasonable" price you hope the housing price to be after the burst?
If not, what are the reasons backing the high price?

2. Do you have the plan or are you willing to buy a house in Taiwan?
If yes, why and when?
What's the advantage and disadvantage of renting a house and buying a house respectively?

Sessioin 2 Questions

3. Is the high housing price the main reason to put off starting a family, and thus reduce the birth-rate and influence Taiwan's economy in the long run?

4. What constructive advice can we give to the youth in Taiwan if their dream is to "own" a house?
What do they need to do to achieve the goal?


********************************************************************************************************************************************
Agenda:
6:45 ~ 7:00pm Greetings & Free Talk / Ordering Beverage or Meal / Getting Newcomer’s Information
7:00 ~ 7:10pm Opening Remarks / Newcomer’s Self-introduction / Grouping
(Session I)
7:10 ~ 7:50pm Discussion Session (40 mins)
7:50 ~ 8:10pm Summarization (20 mins)
8:10 ~ 8:25pm Regrouping / Instruction Giving / Taking a 10 Minutes Break (Intermission)
(Session II)
8:25 ~ 9:05pm Discussion Session (40 mins)
9:05 ~ 9:25pm Summarization (20 mins)
9:25 ~ 9:30pm Concluding Remarks / Announcements
********************************************************************************************************************************************
聚會日期：列於該貼文主題內
聚會時間：當天請準時於 6:45 pm 到達 ~ 約 9:30 pm 左右結束
星期三聚會地點：丹堤濟南店
地址、電話：台北市濟南路三段25號 地圖 (02) 2740-2350
捷運站：板南線 忠孝新生站 3 號出口
走法：出忠孝新生站 3 號出口後，沿著巷子(忠孝東路三段10巷)走約 2 分鐘，到了濟南路口，左轉走約 2 分鐘即可看到。
最低消費： 80 元


注意事項：
1. 文章是否需要列印請自行斟酌，但與會者請務必自行列印 Questions for discussion。
2. 與會者請先閱讀過文章，並仔細想過所有的問題，謝謝合作！

給新朋友的話：
1. 請事先準備 2~3 分鐘的英語自我介紹；會議結束前可能會請你發表 1~2 分鐘的感想。
2. 請事先閱讀文章以及主持人所提的討論問題，並事先寫下自己所欲發表意見的英文。
3. 全程以英語進行，參加者應具備中等英語會話能力，對任一討論問題，能夠以 5 到 10 句英文表達個人見解。
4. 在正式加入之前，可以先來觀摩三次，觀摩者亦須參與討論。正式加入需繳交終身會費 NT$1,000。

[Tina Sun]

Buying a house in Taipei is really a dream that I can't never realize......

[Laura]

Regret, I can not join meeting for this great topic,

I will be very busy in end of Month.

[Rock]

Of course the government can reduce the price of housing to half or even quadrant over night-- it's a piece of cake for it. The question is: why should it do so? Why should the people who compose the government ever want to reduce their own wealth? Besides, bursting a bubble, which is more like a bomb now, is dangerous. However, if you vote for Lin Fefang as the President, he may do that for you.

[Kenny]

Why should the people who compose the government ever want to reduce their own wealth?

Yes, My coworker in united states ever told me a same argument. The Government is composed by a group of wealthy people. So.........

This saturday I have a trip and can not join meeting. See you next time!

[Tina Sun]

Indeed a good topic and obviously it is the main hot topic that citizens in Taiwan concern most and keep focusing on. Thanks, David.

Attendees: 19

Host: David Jr.
Bryan, Christine, Gloria, Iris, Johnie, Kooper, Lawrence, Liwen, Morris, Rock, Ryan, Sabrina, Sherry Liao, Sherry Lin, Stacy, Steve, Tim, Tina
Speaker:
I: sherry Lin, Iris, Liwen, Kooper
II: Christine, Tina, Steve, Ryan