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Premier aims to tackle high realty prices

TAIPEI, Taiwan -- Taipei's housing prices should be further reduced so that they are about 10 times that of average annual income, Premier Jiang Yi-huah (江宜樺) said recently.

According to government statistics released last week, Taipei's housing prices are currently 15 times the average annual income. The high prices are mainly a result of high demand and low supply in the real estate market.

Jiang alluded to his own experience to describe Taipei's surging real estate prices. He said that even his two sons who are now grown-up cannot afford to buy a new house, while the value of his own apartment has gone up twofold since it was purchased.

The government plans to suppress housing prices via two measures, according to Jiang. First, it will roll out a new taxation system to force real estate investors to release more of their vacant properties onto the market. Second, the government will construct more apartment buildings in suburbs such as Tamsui District and Linkou District. Both of these measures aim to increase housing supply. The Cabinet may work with the Taipei City Government to regulate the real estate market, Jiang said, adding that it is a very important policy under his tenure.

Real Estate Businesses Approve

Tsai Chung-i (蔡宗易), the vice president of major local construction company Farglory Group (遠雄集團), concurred that Taipei's housing prices are exceedingly high, and affirmed the government's decision to build more apartments in the suburbs. With a convenient transportation system, more people may be willing to live in the suburbs, instead of dwelling in downtown Taipei.

According to the Federation of the Real Estate Development Association of the R.O.C., to cut the housing-earnings ratio from 15 to 10 is equivalent to a one-third property price reduction. The substantial price cut might lead to banks tightening money supply and consequently result in financial crisis. Nonetheless, the association affirmed the government's decision to construct more buildings, but pointed out that it is also important to raise local earning levels.

The government should focus more of its development efforts in Southern Taiwan, said Su Chi-jung (蘇啟榮), manager of the Department of Enterprise and Research of Sinyi Realty (信義房屋). A number of people have moved to Taipei where employment opportunities are abundant. This has resulted in higher housing demand and consequently higher housing prices. By creating more job opportunities in Southern Taiwan, the government may reverse the trend, he said.

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