Will housing prices spark next protest movement in Hong Kong?

October 27, 2014 12:36
Protesters staged a "sleep-out" on Taipei's Renai Road in October to protest soaring house prices and government inaction toward them. Photo: Internet

The Sunflower Movement which occupied Taiwan’s Legislative Yuan for nearly a month this year and torpedoed a trade agreement with mainland China served as an inspiration for Hong Kong's pro-democracy campaign that has seen thousands of students camping on the streets.

In early October, 20,000 people camped outside the most expensive apartment block in Taipei to protest unaffordable housing prices. Will this be the subject of the next protest movement in Hong Kong?

The "sleep-out" on Renai Road on Oct. 4 to 5 was launched by the Housing Movement to protest soaring house prices and government inaction toward them.

With more than 70 civic groups involved, the movement had three demands -- an overhaul of the property tax system to curb speculation, laws to promote public housing to 5 percent of total housing and improved protection for homeowners against land expropriation. It sounds very familiar to Hong Kong people.

The situation for those seeking to buy property in Taipei is worse than in Hong Kong. Housing prices have reached an average US$6,695 per square meter. That means the average apartment costs 15.01 times the average annual household income, according to the Ministry of Interior.

Since 2001, real estate prices in the city have nearly tripled. By contrast, wages for the vast majority of the workforce have not increased over the last 16 years.

Government figures released at the end of last year found that, in the first 10 months of 2013, the average real monthly wage in Taiwan was NT$45,112 (US$1,507.2), lower than the NT$45,514 of 1998, despite average GDP per capita growth of 2.75 percent in the 2003-2012 period.

According to US-based consulting company Demographia, that puts Taipei ahead of Hong Kong, with 14.9 times average income, with Vancouver and San Francisco following with 10.3 and 9.2 times respectively.

In addition, 44 percent of Hong Kong people live in housing rented at low rates from the government or subsidized homes. In Taiwan, the number who rent public housing units is extremely low.

“Our government can pass a cross-strait service agreement within 30 seconds but chooses to do nothing about housing prices for 25 years,” said Peng Yang-kai, spokesman of the Housing Movement.

What has pushed up the prices is quantitative easing by Western central banks, which has driven down yields on assets in the West, and the flood of bank loans in the mainland. While the government puts restrictions on investment in property from China, buyers find ways around them. Also, in 2009, Taiwan regulators lowered taxes on real estate and gifting.

Wealthy Taiwan people living on the island and overseas are betting that the restrictions on mainland money will be gradually lifted, putting Taipei on equal status with New York, San Francisco, Vancouver, Sydney and London as magnets for the mountain of Chinese real estate investment.

This was one reason why the Sunflower Movement opposed the Cross-Strait Service Trade Agreement; it would facilitate such investment by opening 64 sectors to mainland companies.

Another reason for the high prices is that land taxes are calculated not on the market value but "a standard unit price for housing construction" set by the local government that is far lower. This makes the cost of vacant land and vacant houses cheap and encourages people to buy and hold them.

The Urban Renewal Act has been repeatedly amended, making it easier to renovate or rebuild properties and putting home-owners at a disadvantage.

But this is not a new situation. The October "sleep-out" was held close to the 25th anniversary of the Snails Without Shells, a similar protest against unaffordable housing held on Aug. 26, 1989, which attracted more than 50,000 people. Ma Ying-jeou, then mayor of Taipei and now the island's president, came to speak to the crowd and show his support.

So why has nothing changed? One factor is the government regards real estate as an engine of the economy and does not want to restrain it; it accounts for nearly 9 percent of Taiwan’s GDP.

Another is the close links between politicians and real estate companies who are among the main funders of their election campaigns that cost at least NT$100 million. They strongly oppose changes to existing regulations that would cut their profits and increase the cost of holding land.

The Housing Movement chose the luxury building in Renai Road because it is home to Sean Lien, KMT candidate for the upcoming mayoral election and son of former Vice-President Lien Chan, and the brothers who control Ting Hsin Group, one of Taiwan’s richest families.

The bad news for the students in Admiralty and Mong Kok is that, during those 25 years, Taiwan has had a democratic transformation, resulting in popular elections for all levels of government. It has a raucous democracy, with a free media and boisterous debates every night on television.

But this has not been enough to overcome the close ties between politics and property and the mainstream opinion among policy makers.

So would universal suffrage in Hong Kong restrain property prices?

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A Hong Kong-based writer, teacher and speaker.