“Shell-less Snails” protest Taipei’s rising house prices

While house prices continue to skyrocket in and around metropolitan Taipei, an alliance made up of mostly working-class people, known as the Shell-less Snail Movement, have threatened to stage a big demonstration unless the government takes effective steps to halt rising real estate prices by the end of this year. Leaders of the alliance held a press conference on March 26th on a former government owned lot recently sold to private developers for NT$780 million (US$24.3 million).

The group is known for organizing hundreds of thousands of people in spending a night on Taipei’s busy Zhongxiao East Road twenty years ago.They accused large developers of manipulating house prices and urged the government to ban speculation, in essence, to prevent real estate property developers from buying land and leaving it idle before reselling it. The alliance feels that state-owned land should not be sold, but maintained for public use. Furthermore, the groups want the government to implement stricter credit controls and clamp down on property tax evasion by investors.

Why the rise?

Except for dips in 2003 during the SARS outbreak, housing prices have continued to skyrocket in Taipei. Even when the subprime mortgage crisis burst the American housing bubble, Taipei’s housing prices just dropped a little before rising again. With declining birth rates, more people moving to China for business and work, additional housing in the suburbs, plus a higher unemployment rate after the economic downtown, there should be no reason for house prices to steadily rise.

Some have attributed the rise to Taiwanese businessmen thinking Taipei’s housing prices are still reasonably inexpensive compared to those in Hong Kong, Shanghai and Beijing. Others might be optimistically, thinking Chinese investors will come to invest in the property market in Taipei.

According to Taipei-based China Times, the average price of a house in Taipei is NT$420,000 (US$13,100) per ping (about 35.5 square feet), compared to NT$1.63 million (US$50,780) per ping in Hong Kong, NT$1.46 million (US$45,500) in Japan, and NT$1.2 million (US$37,380) in Singapore. Compared in this way, home prices in Taipei are not expensive.

Though, according to the Interior Ministry, house prices in Australia are 6.8 times the average household income, 5.3 times in Japan, and 5.2 times in Britain. By contrast, it is seven times in the five metropolitan areas of Taiwan, and 9.06 times in Taipei City. Calculated this way, the average home price in Taipei is indeed more expansive than in many developed countries, China Times reported.

Other factors spurring the market

According to Wealth Monthly, contributing factors could also include favorable government measures to stimulate the housing market to offset the global financial downturn, the warming of cross-strait relations, the anticipation of “Chinese investors coming to town” by both the government and the private sector, and the lowering of estate taxes to 10 percent – all incentives attracting overseas money into Taipei’s real estate market.

“Taiwan’s low interest rate is the culprit in building up the housing bubble this time,” said former Finance Minister Lin Chuan. Even the insurance industry is attracted by the low interest and is investing in the housing market. Another reason attracting overseas money is the low foreign exchange rate of Taiwan dollars which have been kept at US$1 to NT$32, said the magazine.

Whatever the reasons for the rise, the government has come under increased pressure from groups like the Shell-less Snail. In response, the Ma administration has halted the sale of government-owned land and is building more low cost public housing near mass rapid transit stations in the suburbs of Taipei. The government has also tightened credit procedures with the Central Bank and the Financial Supervisory Commission, asking lenders to provide more details of their mortgage operations and real estate investments.

But, upon announcing a halt of government-owned land sales, the stock price of private developers shot up due to the decrease in the supply of land.

More government control of the market is urged

Chang Chin-oh, a land policy professor at National Chengchi University, said this wave of housing price distortion comes from the demand side. Therefore the government’s policies trying to affect the housing market from the supply side by halting land sales and building more low cost public housings is useless. The effective way should come from the financial side by tightening mortgage operations.

Lin Cho-yu, a colleague of Professor Chang, blames the government’s housing policy for not being publicly directed, but aimed towards stimulating the economy and stabilizing the financial markets. From the perspective of providing resident rights to the general public, Chang, Lin and others all agree that the government should provide housing to the public “for lease, not sale.”

They believe the government should have more foresight in urban planning and implementation of housing policy. For example, if the government had a better mass rapid transportation system and balanced development, people wouldn’t have to live in the crowded city and could spread to the metropolitan suburbs. Thus the issue of rising housing prices in a centralized area would not be such a problem.

The Shell-less Snails have urged voters to examine the campaign promises of candidates who are running for the Taipei Metropolitan mayor and New Taipei Metropolitan magistrate at end of the year, and to take note of their housing policies.