Thursday, February 12, 2015

The Construction-Industrial State Eats Taiwan: Commonwealth on Housing Prices

Caught these two fighting several years ago in Gukeng.

Commonwealth once again scores with a very good piece on how the legislature nuked reforms that protected consumers and instead chose to keep housing prices to stay high and help developers make money:
In December 2011, with the presidential election drawing near, the presidential candidates from both the Kuomintang (KMT) and Democratic Progressive Party (DPP) strongly supported the quick passage of five laws equated with "housing justice," including the registration of actual real estate transaction prices. The Executive Yuan's original version included the listing of actual pre-sale housing prices, which were required to be registered within 30 days of the transaction in the interest of transparency.

After the bill was sent for cross-party consultations, however, that portion of the bill quietly disappeared. Replacing it was a clause permitting sales agents to list the actual transaction price at the conclusion or termination (i.e. completion of sale) of the agent sales contract.

Often many years pass between the initiation of construction to completion of a pre-sale property transaction. During that interim period the buying and selling of pre-sale properties begins, and a given property can change hands among different investors several times by the time construction is completed. As long as the actual transaction price is not listed, sales agents and investors can team up to drive housing prices up. Meanwhile, consumers are kept in the dark, or treated as guinea pigs at the end of the line paying the highest price. "Listing prices only after the completion of sale means nothing at all," says Consumers' Foundation Housing Committee convener Lin Wan-ken, adding, "That is the biggest failure of actual sales price registration."
This paragraph refers to houses that are sold before the building is constructed. As the third paragraph makes clear, the real estate agents collude with the developer to jack up prices by flipping the house back and forth, then selling it to a mark buyer after the price has been inflated. The legislature provided legal cover for this travesty of a market by passing this law, since it shoves the final price far into the future:
In an interview with CommonWealth, [KMT legislator] Wu Yu-sheng says that he and legislator Lai Shyh-bao had been pushing for the registration of actual transaction prices, but that tremendous pressure applied by the construction industry lobby deterred legislators from backing it. "Some people didn't say anything. They only said at the end of the process that they'd go along if pre-sale housing was excluded."
According to the article, President Ma himself presided over the negotiations. But "a number of legislators" opposed the stricter wording and Speaker Wang feared "no common ground" could be found. Hence the giveaway passed. So although the Commonwealth piece says it will address who did this, it never really comes to a conclusion.

What a joke. As Commonwealth says, this needs to be fixed ASAP.
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