Empty homes issue bring Taiwan social and economic challenges

Taiwan’s empty homes issue is a multi-faceted problem which demands radical solutions

Zuoying Apartments

China is well-known and widely ridiculed for its "Ghost Cities," huge modern cities filled with shining tower blocks, contemporary homes, perfect parks and communal spaces, but with absolutely no people living in them.

In China, these moribund metropolises serve a dual purpose. Mostly, they are an economic stimulus designed to keep the country’s GDP growing, boost economic prosperity, and thereby placate popular unrest against the Communist regime. They are also part of the Communist Party’s stated long-term aim to urbanize the population by forcing them out of rural areas and into the cities. After all, it is much easier to control and monitor people if they are all in the same place.

There should be no place for such ghost cities in Taiwan, which the economy is driven by the markets rather than the state and its social engineering agenda. But recent data shows that in fact, empty property in Taiwan is a growing problem.

According to figures published Construction and Planning Agency, which is part of Taiwan’s Ministry of the Interior, more than 10% of Taiwan’s homes were classified as empty in 2016. In New Taipei City alone there were an astonishing 118,067 empty units recorded. Kaohsiung was almost as bad with 110,956 units.

To put these figures into some sort of context, London, a city with a population more than twice as large as New Taipei City and more than three times larger than Kaohshiung, has just 20,000 recorded empty homes.  The question is, why are these numbers so troublingly high?

The "development" of Kaohsiung

As recently as ten years ago, much of the area of Kaohsiung to the north of the city center was a mix of industrial buildings, wasteland, and a few, scattered old communities. Today, visitors to areas such as Aozihdi (凹仔底), and those surrounding the Kaohsiung Museum of Fine Arts (高雄市立美術館) are met with gleaming expanses of apartment buildings, newly constructed homes, and a smattering of trendy restaurants and boutiques.  

It all looks very impressive and feeds the myth that the arrival of the nearby Xinzuoying High Speed Rail Station (新左營車站) in 2007 prompted the development of a derelict area into a thriving community. Some even talk of the area around Bo'ai Road and the Kaohsiung Arena as being the new city centre.

Until, that is, you walk around at night. Because after dark, these expensively built towers disappear into the gloom, with no more than a handful of windows lit by people living within. Almost all of these monoliths are massively under-populated.

Next to the rather dated and shabby apartment block I live in in Aozihdi, is the most expensive and luxury building in the city, where prices for a new apartment go up to NT$980,000 per ping. It is fully staffed with a team of security, all tooled up like paramilitaries, and sales staff, but more than a year after opening, there is literally no-one living there. Not one person.

Why is this? Well, some people might still be decorating their plush new home to their tastes I suppose. Perhaps others are stuck in a nightmare property chain that has no end in sight? But, the most obvious issue is that of price.

Property Prices

Housing prices across Taiwan simply do not reflect the reality of what most people can afford to buy. Unless, you want to live in a wardrobe, how can any normal worker afford this when the minimum wage is just NT$22,000 a month and the average wage is just over NT$40,000? The average newly-built apartment in Kaohsiung will cost around NT$250,000 per ping, while even an older apartment will set buyers back around NT$170,000 per ping. An average earner would have to work for 25 years to buy a single ping in the block next to mine. Even regular apartments are out of reach. Is it any wonder that apartment blocks stand empty?

At the same time, in the traditional neighborhood where my in-laws live, one set of neighbors have two sons and their families living with their parents in the same house. Both sons and their wives work decent jobs for an honest wage, but neither can afford a home for their family.

The disconnect between the housing that developers are building and what Taiwanese citizens actually need is clear. So, why are they not building the affordable homes the market demands? The answer seems to boil down to profit.

Average house-buyers purchasing a regular house for a normal price do not generate profit for property developers. Apartments generate profit, because you can build far more homes on a smaller piece of land than is the case with houses. The higher you go, the more you make. And of course, you want to aim these apartments at those who can afford to pay the most. That means Taiwan’s wealthy elite. But is also means overseas investors and, in Taiwan’s case, that means the Chinese.

Overseas Investment

The problem of rising housing prices has its roots in overseas investors, especially from China. Chinese investors have driven property prices up more than 200% in Taipei in the past decade making it one of the most expensive cities in the world to buy a property. When prices got too high there, investors moved on to Kaohsiung and other cities across Taiwan, with the same result.

It is perfectly feasible that Chinese investors own many of the flats in my neighborhood. They will have been bought as an investment, kept empty of course, because rental profit is minimal and risks wear and tear to the property.

There is nothing wrong with property investment or even overseas property investment, but China is not a regular investment partner. In China, all money is tied to the Communist Regime and if there has been a glut of investment in Taiwan, this is because the Chinese Communist Party has approved it. 

Their goal is to destabilize Taiwan in order to swing popular opinion back towards reunification and they have no problem in playing a long game. Driving up property prices is a great way to create societal problems and it success in Taiwan has been smoothed by Chinese involvement in the property development sector as well as the close links between government and developers.

So, what has to change to enable ordinary Taiwanese people to buy their own home once again? As the property development sector has proved unable to police itself, stronger regulation seems to be the only way to get them to tow the line.

Regulations to limit Chinese investment has so far proved woefully ineffective and so need strengthening, with greater penalties for those who seek to evade them. Powers to protect traditional communities from the developers' bulldozers should be introduced, especially where historically or architecturally significant buildings and communities are based.

It is the developers not the people who want to see the back of these. Unutilized, public land should be sold off with the express requirement that it be used solely for affordable housing. And lastly, there needs to be a requirement for every property development to have a quota of affordable housing included.

These are extreme measures and will be met with opposition. But this is a serious issue which cuts through Taiwanese society and it warrants a radical solution.