2022.08 The Taiwan Banker NO.152 / By Su Weihua (蘇偉華)
Reduce Anxiety About Homebuying by Realizing the Right to LiveBanker's Digest
A stable dwelling is both a demand and a necessity. Individuals must have access to shelter before the group can survive and prosper. The main function of housing should be living, not speculation. When real estate is no longer held for the purpose of living, and corporations trade property, the transactional and speculative functions of housing gradually diminish its original function of living. Buyers will mistakenly think that housing is a liability, causing unnecessary worry among those who truly need housing.The “right to adequate housing” does not mean that everyone is a homeownerThe United Nations Office for Human Rights (OHCHR) notes in its latest report that as the center of our social, emotional and sometimes economic life, the home should be a place of refuge, a place that offers peace, security and dignity. Adequate housing was recognized as part of the right to an adequate standard of living as early as the 1948 Universal Declaration of Human Rights and the 1966 International Covenant on Economic, Social and Cultural Rights. The economic crisis following the pandemic has left many unable to pay their rent or mortgages. The OHCHR calls on national, regional and local governments to prevent a new wave of forced evictions and to take urgent steps to address discriminatory patterns of social exclusion that deny people the right to adequate housing, to ensure that no one is left behind.However, the “right to adequate housing” should be seen as the right to live in security, peace and dignity – not to the asset itself. The UN report also noted a common misconception that the right to housing means that everyone wants to buy a house, or that the government wants everyone to build a house, or those without a house can ask the government for one. On the contrary, it primarily addresses homelessness, forced evictions, and discrimination, focusing on vulnerable groups. Therefore, the role of the government is not to directly provide housing, but to coordinate actions involved in housing production. Therefore, two challenges arise: for the government, giving everyone appropriate housing rights through a diverse and flexible combination of strategies; and meanwhile for the people, liberating them from the myth that the right to live means the right to buy a house. Selecting the most suitable living style for one’s self is an important question from the perspective of life cycle financial planning.Countries change their thinking to increase affordable housing supplyIn the past, the most direct way to solve the right of residence in other countries was to increase the cost of ownership, such as raising loan rates, or levying housing taxes. However, experience in many countries has shown that this approach is ineffective and has severe side effects. For example, former South Korean President Moon Jae-in implemented a variety of housing policies which in fact led to the largest increase in housing prices in 15 years – even more than in Singapore, Hong Kong and London. Out-of-control housing prices caused his polling to fall. Therefore, separation of the right to live in real estate and its ownership has entered the mainstream of policies in various countries. In 2017, the UK launched a “shared ownership” policy to lower the threshold for young people to buy houses. Buyers can own part of a property, and live in it, for just 25% to 75% of the sales price; the down payment can be as low as 5%. After moving in, they just repay the loan slowly like rent, and then buy other property rights from the seller when they have the ability in the future. For example, the down payment for a house of 10 million yuan is only 500,000 yuan. After a young person moves in, they can slowly repay the principal by paying rent to realize their right of residence.Social housing construction has gradually become a mainstream strategy for housing rightsAs Europe and the US face problems of frozen wages and rising housing prices, coupled with the impact of the pandemic, the housing burden problem has become more serious. Supply of affordable housing has become the focus of housing policies, and construction of social housing has gradually become a mainstream policy choice.According to a recent OECD report (see Figure 1), in terms of stock (proportion of social housing in total housing), there are 28 million social housing units in OECD countries, accounting for 6% of the total. The Netherlands, Denmark, Austria, the UK, and France have more. The Netherlands even approaches 40%. French social housing is also nearly 15%, and Paris reaches 21%, or more than one out of five units. Taipei and Paris are short on land, but the Paris City Government still has a target of 25% social housing stock in 2025, and 30% in 2030. In terms of growth rate in ratio of social housing expenditure to GDP (Figure 2), many countries have caught up in recent years, especially New Zealand, Australia, Austria, and the US.Source: OECDSource: OECDIn the Netherlands, even historic sites can be turned into social housing. After they are transferred to the owner, the interior can be turned into a student dormitory. Tenants can also apply for government housing subsidies. In Vienna, known as the capital of social housing, 62% of citizens live in social housing; Vienna builds 9,000 social housing units every year to increase supply and stabilize prices.In addition, it is becoming more common to incorporate social housing into urban development plans. Social housing not only provides housing, but also promotes economic development. It provides public infrastructure, but also serves as a base for entrepreneurship combining life, work and consumption. In addition to construction, renovation and maintenance are also required to maintain the attractiveness of social housing.Governments strive to transform concepts of housing rights“Where there is land, there is wealth.” Taiwan’s longstanding problems of real estate speculation and high housing prices have plagued successive governments. Therefore, since its establishment in 2018, the National Housing and Urban Regeneration Center (HURC) has assisted the government in integration of and investment in urban renewal projects, implemented of urban renewal projects, and managed and operated social housing and new urban real estate. In just a few years, the government has gradually seen results on its policy goals in social housing, reuse of public and private assets, urban revitalization, and improvement of living environments. However, another key factor for the success of social housing policy is attitudes: we should understand that buying a house is by no means the only option in life. If real estate is mistakenly defined only as a liability, housing pressure will eventually degrade quality of life and pursuit of future dreams. For those with limited budget who rigidly require their own property, the suburbs are recommended, trading time for space. Blind pursuit of the trend of homeownership comes at the expense of other life options. The key is not to be trapped in anxiety over house prices. When faced with the heavy burden of a home purchase, the public should aim to solve the problem of stable living, not just chase price levels.