Taiwan plans more affordable housing as prices spiral
Taiwan officials said on Friday they planned to resume construction of affordable housing after an 11-year hiatus, another step to offset rising home prices that have kept average income earners out of the market.business Updated: Oct 15, 2010 10:47 IST
Taiwan officials said on Friday they planned to resume construction of affordable housing after an 11-year hiatus, another step to offset rising home prices that have kept average income earners out of the market.
The island's interior ministry will recommend by the end of October how many more units to build and at what cost, ministry construction office head Yeh Shih-wen said over the telephone. That would raise the amount of affordable housing past the 5 percent of Friday's total.
A new scramble to add affordable housing is designed to ease six straight years of price increases as speculators have taken advantage of low-interest loans, particularly in the capital Taipei.
Taiwan's central bank raised rates in September to 1.5 percent, as the island's economy recovers steadily and to pre-empt asset bubbles from forming.
The ratio of home prices to disposable income in the capital Taipei is at the highest in 20 years and the average price for an existing apartment was around $442,100 in the first eight months of the year, 11.5 times average yearly household incomes.
"Because home prices in the Taipei area have gone so high, average income earners can't afford them," Yeh said. "The first phase of affordable housing will be directed at Taipei."
Taiwan joins Hong Kong and major cities in mainland China, among other places, in trying to rein in home prices driven up largely by speculators. Plans to add affordable housing follow a directive from Taiwan President Ma Ying-jeou earlier in the week. Ma's Nationalist Party faces mayoral and county magistrate elections in November as spiraling home prices weigh on voters.
In another move to check property prices, the central bank will ask lenders to report every two weeks loans made to construction firms and for land development, sources familiar with the issue said in early October.
"Efforts to contain asset prices involve market-based measures as well as increasing the supply of housing," said Tim Condon, chief Asia economist with ING in Singapore.
Taiwan quit building affordable housing in 1999, replacing it with subsidies. But only about 70,000 households qualify for those, keeping middle-class Taipei people out of the market.
Much of Friday's affordable housing is also reserved for military families or retired military personnel.