This is a fantastic piece and thank you for sharing. I did not know that Taipei was having this problem, it seems to be flying under the radar. I have an essay coming next week at Risk & Progress that echos the sentiment here:
1) Remove taxes that impose costs on building things.
2) Ease zoning regulations that artificially inhibit the ability of housing demand to meet supply.
The latter is an issue, as noted in this article, of giving too much NIMBY veto power at the local level. Too much “democracy” can be a problem, which is why zoning regulations should not be a locally controlled issue. This seems to work well in Japan.
Thanks, glad you liked it. Almost everything about Taiwan flies under the radar. Even TSMC is less well known than it should be, given how critical it is to the modern world.
Interesting post! I just returned from living in Kaohsiung for 6 months. I wonder if you have any idea how much what you're describing also applies in other Taiwanese cities. I know there's been a fair bit of construction in Kaohsiung over the past two decades, but I'd guess it's not keeping up with demand, as new apartments there are quite expensive.
Aside: You use the word "spurn" a couple times where you should use "spur". "Spurn" means to strongly reject, not to encourage.
Thanks Dave. All Taiwanese cities are subject to the same planning laws, but none face quite the same population pressures or geographic constraints as Taipei. Nevertheless, as you note, housing in other cities has become increasingly expensive of late, with prices roughly tripling across the country since ~2006 (obviously from different starting points). There are a number of different calculation methods used, but this will give you the general idea:
In broad terms: same law, same failure mode where the permissive zoning created by the earlier regime stayed in place, but the ability to rezone to create additional capacity is highly constrained. The effects of this were felt first and most acutely in Taipei, given the greater demand pressure (and lower residual capacity, given the much stronger growth the city was undergoing even at the time), but this has since spread to cities throughout the country.
Googling 'taipei zoning rules' will give you a bit of a sense of what's online - the regs, the maps, etc. Taipei City's website has quite an extensive FAQ as well. That said, it's fair to say that most of the literature on the matter is either in Mandarin, offline, or both.
This is a really interesting article - thanks for writing. My understanding of the Taiwanese (and New Taipei's) housing market was that while buying a house is prohibitively expensive, renting is quite affordable relative to incomes and vacancy rates are high. This was something I found difficult to reconcile with the supply-side explanation for Taiwan's high house prices.
Was wondering if you had any thoughts on the issue. I could certainly be wrong on the facts here - I am merely parroting bits I've read elsewhere.
Remember that the reputation of a relatively cheap rental market in Taiwan are from foreigners, who're thinking of prices denominated in USD or Euros in their home countries rather than local incomes. For locals, rent is far less affordable - the rent for modest 3bedroom apartment out in New Taipei City absorbs almost half the median income.
That being said, there is certainly a discrepancy in Taiwan between the sale prices and where you'd expect rents to be. This is partly due to the widespread construction of 'walk up' structures on the rooftops of many of Taiwan's older buildings. These are quasi-illegal, and without planning consent, but in practice tolerated. They introduce considerable supply onto the rental market, bringing prices down, but don't affect the sale market as they aren't on a seperate title. You can spot many of them in the foreground of the 2nd-to-last image of this essay:
This is a fantastic piece and thank you for sharing. I did not know that Taipei was having this problem, it seems to be flying under the radar. I have an essay coming next week at Risk & Progress that echos the sentiment here:
1) Remove taxes that impose costs on building things.
2) Ease zoning regulations that artificially inhibit the ability of housing demand to meet supply.
The latter is an issue, as noted in this article, of giving too much NIMBY veto power at the local level. Too much “democracy” can be a problem, which is why zoning regulations should not be a locally controlled issue. This seems to work well in Japan.
Thanks, glad you liked it. Almost everything about Taiwan flies under the radar. Even TSMC is less well known than it should be, given how critical it is to the modern world.
Interesting post! I just returned from living in Kaohsiung for 6 months. I wonder if you have any idea how much what you're describing also applies in other Taiwanese cities. I know there's been a fair bit of construction in Kaohsiung over the past two decades, but I'd guess it's not keeping up with demand, as new apartments there are quite expensive.
Aside: You use the word "spurn" a couple times where you should use "spur". "Spurn" means to strongly reject, not to encourage.
Thanks Dave. All Taiwanese cities are subject to the same planning laws, but none face quite the same population pressures or geographic constraints as Taipei. Nevertheless, as you note, housing in other cities has become increasingly expensive of late, with prices roughly tripling across the country since ~2006 (obviously from different starting points). There are a number of different calculation methods used, but this will give you the general idea:
https://en.macromicro.me/collections/15/tw-housing-relative/124/tw-housing-price-sinyi
In broad terms: same law, same failure mode where the permissive zoning created by the earlier regime stayed in place, but the ability to rezone to create additional capacity is highly constrained. The effects of this were felt first and most acutely in Taipei, given the greater demand pressure (and lower residual capacity, given the much stronger growth the city was undergoing even at the time), but this has since spread to cities throughout the country.
Aside: Yes, whoops!
Loved this post, learned a ton. Are there other resources in English to learn about Taipei zoning?
Thanks. What were you wanting to know?
Googling 'taipei zoning rules' will give you a bit of a sense of what's online - the regs, the maps, etc. Taipei City's website has quite an extensive FAQ as well. That said, it's fair to say that most of the literature on the matter is either in Mandarin, offline, or both.
Great article.
Cheers :)
This is a really interesting article - thanks for writing. My understanding of the Taiwanese (and New Taipei's) housing market was that while buying a house is prohibitively expensive, renting is quite affordable relative to incomes and vacancy rates are high. This was something I found difficult to reconcile with the supply-side explanation for Taiwan's high house prices.
Was wondering if you had any thoughts on the issue. I could certainly be wrong on the facts here - I am merely parroting bits I've read elsewhere.
Thanks. Good question.
Remember that the reputation of a relatively cheap rental market in Taiwan are from foreigners, who're thinking of prices denominated in USD or Euros in their home countries rather than local incomes. For locals, rent is far less affordable - the rent for modest 3bedroom apartment out in New Taipei City absorbs almost half the median income.
That being said, there is certainly a discrepancy in Taiwan between the sale prices and where you'd expect rents to be. This is partly due to the widespread construction of 'walk up' structures on the rooftops of many of Taiwan's older buildings. These are quasi-illegal, and without planning consent, but in practice tolerated. They introduce considerable supply onto the rental market, bringing prices down, but don't affect the sale market as they aren't on a seperate title. You can spot many of them in the foreground of the 2nd-to-last image of this essay:
https://alethios.substack.com/p/early-observations