好文分享:Taiwan must tackle its property bubble


Source: http://www.taiwantoday.tw/ct.asp?xitem=206369&CtNode=426

Publication Date:06/15/2013
Source: Economic Daily News
Taiwan is faced with an enormous housing bubble, which has only become worse due to loose monetary policies implemented by major economies since the global financial crisis began in 2008. It is time the ROC government instituted measures to rein in the property market before the bubble bursts and directed capital flow to industrial production and infrastructure projects.

The ROC Central Bank recently warned that in some heavily promoted regions, strong downward pressure on house prices remains. The bank mentioned Bade and Qingpu townships in Taoyuan County, and Danshui, Linkou and Sanxia townships in New Taipei City as places at risk of a burst property bubble. The bank’s warning has grave implications not just for buyers, but for all involved in the property business, including the financial industry.

One must first understand the reason causing property prices to climb for the past 11 years, despite an oversupply and low-occupancy rate in Taiwan real estate market. The answer is simple. Since the financial crisis, almost all major economies have coupled low interest rates with loose monetary policy, causing a huge increase in capital flow and money supply and freeing up funds for speculative investment in real estate. In Taiwan the incentive to invest has been even stronger due to a sudden drop in estate and gift taxes after amendments to the relevant laws in 2009.

While investors competed to put this easy money into property, it was easy for those in the housing business and speculators to ramp up prices. This spurious investor demand created a false impression of a hot market, causing homebuyers to jump in for fear of being left out in the cold. Simply put, the increase in property prices in the past four years is purely a result of hot money.

The problem is that the hot money will come to an end sooner or later—as soon as loose monetary policy does. Recent U.S. industrial production and employment figures have been optimistic and the magnitude of fiscal easing will eventually be reduced. Global property markets will be the first to feel the impact of the economic upturn and tightened credit. Given the huge size of Taiwan’s property bubble, people should think of the risks involved while they still have time.

Once hot money flows end, the property market will return to fundamentals and be subject to the law of supply and demand. The 1.43 million unoccupied properties islandwide, a ratio of more than 20 percent of total supply, are already putting prices under downward pressure. The problem is further worsened by an aging population, a falling birth rate, and the long-term trend of disappearing demographic dividends from what was traditionally a growing population.

The presence of a bubble is manifest in a wide range of Taiwan property market indexes: average prices are eight times more than average income; average mortgage payments are more than 30 percent higher than household income; property loans exceed 40 percent of gross domestic product; the property price to monthly rental ratio is more than 300 and rental returns are one of the lowest in the world; and for years property price increases have exceeded GDP growth rate and investment demand is more than 20 percent of the total. It is clear the risk from the bubble is enormous.

An examination of last year’s financial reports from listed construction companies tells a similar story. Several famous construction firms recorded earnings per worker from NT$25 million (US$837,000) to NT$116 million, a figure any high tech or financial firm can only dream of.

The government should think of a way to make funds flow to manufacturing industry and public infrastructure. A range of necessary but long-term policies should be instituted to normalize the housing market: the so-called luxury tax should be expanded to encompass all investment, taxation on second homes should be reasonably increased, and a capital gains tax based on actual real-estate transaction prices should be implemented. (SDH)

(This commentary first appeared in the Economic Daily News, June 7, 2013.)
2013-07-10 10:37 #1

CEO2 wrote:

香港並沒有泡沫 而且房價越走越高

講明了 台灣 香港 是 中國人 僅剩的 自由民主 的兩塊寶地
錢不丟在這邊 是要丟到哪邊??
有錢人不待 自由民主的國度 是要在共產社會等著被清算鬥爭嗎
這道理 這篇文章隻字未提

CEO2 wrote:

a very good article indeed,
sadly Ma's goverment won't listen to this,
so many ppl out there even don't understand,
simply pathetic, consequences will come, let's wait~
I still believe that the main flaw with these types of analysis is that taiwan's GDP or income per capita is grossly underestimated due to a quite inefficient, or "loose", taxation system. Too many businesses and individuals work around cash and the penalties for tax invasion are in general very little. I wouldn't be surprised if the "actual" income per capita actually is closer to $30K-40K USD.


Source: Economic Daily News


william.tsai007 wrote:

這是香港人自找的, 196x-197x 年香港有機會獨立但自己放棄, 因為他們眼裡只有錢..!
huangcc72 wrote:


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