With an annual growth rate of 0.62 per cent since 1980, Taiwan’s homeownership rate reached 88 per cent in 2007. This study explores possible causes of Taiwan’s high homeownership rates. The institutional and economic context for tenure choice in Taiwan is reviewed, paying particular attention to the taxation and financing of owner-occupied housing, house prices relative to rents, housing subsidies and housing demand. A model of tenure choice is estimated and then used to simulate policy and other changes. It is concluded that Taiwan’s high rate of homeownership is due primarily to the low user cost of owner-occupied housing, which is due in part to house price inflation. Government mortgage subsidy policies designed to support ownership appear to have little effect.
Get full access to this article
View all access options for this article.
References
1.
BarkerD.MillerE. (2009) Homeownership and child welfare, Real Estate Economics, 37(2), pp. 279–303.
2.
Börsch-SupanA. (1987) Econometric Analysis of Discrete Choice: With Applications on Demand for Housing in the U.S. and West Germany. New York: Springer-Verlag.
3.
BourassaS. C. (1995) The impacts of borrowing constraints on home ownership in Australia, Urban Studies, 32(7), pp. 1163–1173.
4.
BourassaS. C. (2000) Ethnicity, endogeneity and housing tenure choice, Journal of Real Estate Finance and Economics, 20(3), pp. 323–341.
5.
BourassaS. C.HoesliM. (2010) Why do the Swiss rent?, Journal of Real Estate Finance and Economics, 40(3), pp. 286–309.
6.
BourassaS. C.YinM. (2006) Housing tenure choice in Australia and the United States: impacts of alternative subsidy policies, Real Estate Economics, 34(2), pp. 303–328.
7.
BourassaS. C.YinM. (2008) Tax deductions, tax credits and the homeownership rate of young urban adults in the United States, Urban Studies, 45(5/6), pp. 1141–1161.
8.
DietzR. D.HaurinD. R. (2003) The social and private micro-level consequences of homeownership, Journal of Urban Economics, 54(3), pp. 401–450.
9.
DiPasqualeD.GlaeserE. (1999) Incentives and social capital: are homeowners better citizens?, Journal of Urban Economics, 45(2), pp. 354–384.
10.
DunskyR. M.FollainJ. R. (2000) Tax-induced portfolio reshuffling: the case of the mortgage interest deduction, Real Estate Economics, 28(4), pp. 683–718.
11.
EfronB.TibshiraniR. J. (1993) An Introduction to the Bootstrap. New York: Chapman and Hall.
Executive Yuan (2007) Integration of housing subsidy sources plan. Republic of China (Taiwan), Taipei [in Chinese].
14.
GreenR. K.WhiteM. J. (1997) Measuring the benefits of homeowning: effects on children, Journal of Urban Economics, 41(3), pp. 441–461.
15.
HaurinD. R.HendershottP. H.WachterS. M. (1997) Borrowing constraints and the tenure choice of young households, Journal of Housing Research, 8(2), pp. 137–154.
16.
HaurinD. R.ParcelT. L.HaurinR. J. (2002) Does homeownership affect child outcomes?, Real Estate Economics, 30(4), pp. 635–666.
17.
HendershottP. H.SlemrodJ. (1983) Taxes and the user-cost of capital for owner-occupied housing, Journal of the American Real Estate and Urban Economics Association, 10(4), pp. 375–393.
18.
HsuehL.-M.ChenH.-L. (1999) An analysis of home-ownership rate changes in Taiwan in the 1980s, Asian Economic Journal, 13(4), pp. 367–388.
19.
LienH. M.WuW. C.LinC. C. (2008) New evidence on the link between housing environment and children’s educational attainments, Journal of Urban Economics, 64(2), pp. 408–421.
20.
LinnemanP.WachterS. M. (1989)The impacts of borrowing constraints on homeownership, Journal of the American Real Estate and Urban Economic Association, 17(4), pp. 389–402.
21.
LiuJ. H.ChangC. C. (2001) Mortgage borrower prepayment behaviour in Taiwan, Journal of Housing Studies, 10(1), pp. 29–49 [in Chinese].
22.
MooneyC. Z.DuvalR. D. (1993) Bootstrapping: A Nonparametric Approach to Statistical Inference. Newbury Park, CA: Sage.
23.
OatesW. E.SchwabR. M. (2009) The simple analytics of land value taxation, in: DyeR. F.EnglandR. W. (Eds) Land Value Taxation: Theory, Evidence, and Practice, pp. 51–71. Cambridge, MA: Lincoln Institute of Land Policy.
24.
PengC. W.WuS. T.WuS. H. (2007) The influences of effective property tax rate on house value: evidence from Ta-tung and Nei-hu Districts of Taipei City, Journal of Taiwan Land Research, 10(2), pp. 49–66 [in Chinese].
25.
TsaiJ. Y.LinJ. C. (1999) The influence of land value tax and land value increment tax on land price, Public Finance Review, 31(5), pp. 1–19 [in Chinese].
26.
US Bureau of the Census (2003) American housing survey for the United States. Series H150/03, Washington, DC.
