Chin-Oh Chang

Forward Pricing and the Housing Market: the Pre-Sales Housing System in Taiwan

Summary In countries that have experienced rapid economic development the need to establish more efficient markets in which private property can be constructed has induced some innovative solutions. One such solution is the phenomenon of a pre‐sales market that can be observed in Taiwan, Korea and more recently in China. Developers sell their property before building is started to acquire financing for the development companies. This paper discusses the process and, by recognizing the analogy between the pre‐sales market and forward markets, analyses the implications for developers.

Modes of condominium management: A principal-agent perspective

Purpose – Condominium is a dominant form of home ownership in metropolitan areas within Asia. Yet managing and up‐keeping such homes poses a challenge to most condominium owners, with larger condominiums equipped with sophisticated facilities becoming increasingly popular. This paper attempts to develop a model, based on a principal‐agent theoretical perspective, which provides a conceptually vigorous representation of condominium management modes: owner‐management; direct labour and third party agent‐managed modes.Design/methodology/approach – Parallel surveys were conducted in Taipei and Hong Kong to offer empirical evidence of the model.Findings – From the logistic analysis which this paper conducts, it is argued that not only does the choice of management mode reflect the quest for better management service: the mediation effect of agency costs between the lay members of home owner organisations and their leadership, as well as issues between the owners and the professional management agents, is also ...

Collective Action Dilemmas in Condominium Management

Condominium residents are reluctant to join the management committees (MCs) and contribute to the management of local public goods because of free-riding problems. In studying a sample of condominiums in Taipei, it is found that some degree of outsourcing to third party managers (TPMs) is necessary when the scale of local public goods increases. However, higher management fees paid to TPMs are not directly related to higher utilities derived by the residents in the use of local public goods. When self-selectivity in the outsourcing decision is controlled, the results show that the efficiency in the provision of local public goods increases with the effort levels of the MC members. The MC members who adopt a hands-off approach by fully delegating the management responsibilities to TPMs deliver lower pay-offs in the provision of public goods.

Economic and Social Status in Household Decision-making: Evidence Relating to Extended Family Mobility

Models of the allocation of household resources use as a decision rule either the maximisation of a household utility function or the solution to a Nash-bargaining game. The literature on residential mobility has exclusively used the former to analyse the households decision to change location. This is despite the strong empirical evidence that allocations in other areas are more consistent with the bargaining model. In this paper micro-data from Taipei, Taiwan, are used to determine which approach is most appropriate for studying housing mobility decisions. The mobility decisions of nuclear and different types of extended family household are compared to test whether the social and economic roles of different generations affect the household decision process, as is consistent with the bargaining approach. Thus, household mobility is analysed with a richer description of household structure than is found in the current literature, which implicitly treats households as either a nuclear family or some smaller unit. The results support the bargaining model of household decision-making. Conditional probabilities differ between nuclear and extended families, when a member of the eldest generation in an extended household is the household head, and when a member of the eldest generation contributes to household earnings. Of these, it is found that economic status is paramount to social status.

Housing in Taiwan: State Intervention in a Market Driven Housing System

Abstract This paper traces the development and problems of state intervention and market provision of housing in Taiwan in the context of her socio-economic and demographic changes in the last few decades. Although housing in Taiwan is mainly market driven, the market does not appear to be functioning in a mature manner as one may expect. On the other hand, state intervention, which is being depicted as marginal in housing, has been more proactive and influential. The paper concludes that despite the current housing system in Taiwan which suggests Taiwan to be offering a sharply contrast model from other Asian Tigers in state intervention in housing, the strategies she adopted in the beginning phase of housing development was in fact similar to that employed by other Asian Tigers. Yet, the unique socio-economic and political conditions in Taiwan have driven her away from a state-led trajectory in housing development to a market driven system.

Commodification and Urban Development: A Case Study of Taiwan

This paper aims to identify the processes of commodification of land and housing in Taiwan during the era of rapid economic development since the Second World War. On paper, Taiwan has a quite extraordinarily socialistic philosophy of landownership, based on the teachings of Sun Yat-sen and his doctrine of equalization of land rights. However, there is a very large discrepancy between policy and practice and as a consequence urban development and housing delivery are intensely commodified sectors of the Taiwanese economy. The beneficiaries of urban development have primarily been the middle class and powerful development factions. The specific economic and political institutions, related primarily to its precarious relationship with Mainland China, have shaped the perplexed trajectory of commodification of land and housing in Taiwan.

Housing bubble contagion from city centre to suburbs

Most previous studies have reported that housing prices diffuse from the city centre to surrounding areas. However, these studies have overlooked the fact that housing prices comprise fundamental and bubble prices. We investigated whether bubble prices also diffuse from the city centre to suburbs and whether fundamental or bubble prices promote housing price diffusion. We focused on the movement of housing bubbles from the city centre to the suburbs. Using data for the Taipei metropolitan area from 1973 to 2014 for empirical analysis, our state-space model estimates statistically significant fundamental and bubble prices in Taipei City (city centre) and New Taipei City (suburbs). Engle–Granger cointegration test results reveal that the housing and bubble prices of the two cities are cointegrated; however, fundamental prices are not. F statistics reveal that the Granger causality of bubble prices (the central city Granger causing changes in the suburbs) is more significant and powerful than that of the fundamental prices. Therefore, we demonstrate that housing bubbles force housing price diffusion. In addition, when bubble prices spread from the city centre to the suburbs, the housing bubble in the suburbs is larger than that in the city centre, implying that the suburbs have greater potential for a bubble burst crisis called the bubble contagion. Authorities should pay more attention to the bubble contagion and must address the problem of high housing prices in the suburbs to prevent this bubble from bursting

Weight regression model from the sales comparison approach

Purpose – The purpose of this paper is to construct a weight model from the sales comparison approach.Design/methodology/approach – Although weighted average of comparables into sales comparison value is commonly applied in the past, most papers only focus mathematical calculation. This paper examines the correlation between weight and attributes of 6,345 sales comparable properties adopting the multiple regression model.Findings – This paper finds the price type, proximity of transaction date, inside the neighborhood area or not, total gross adjustment as percent, numbers of adjustments and the attributes of other comparables considered in one appraisal are significant on the weight of comparables. The expected MAPE and Hit rate criterions are passed after forecasting 10 percent validation samples modeled by 90 percent samples randomly surveyed.Practical implications – The weighted average to determine the sales comparison value is reasonable since the value conclusion will “correlate” to indication of v...

Urban Renewal and Affordable Housing in Taiwan

In this chapter, we introduce Taiwan’s Condominium Administration Act and examine three multi-owned property (MOP) restrictions. These include: the difficulty of urban renewal; the discrimination problem in social housing; and public concern over unaffordable housing. Our analysis highlights that administration of MOPs is increasingly difficult and subject to conflict due to high housing prices and speculative housing investment, as well as complexity of economic activities and property rights. Furthermore, there is scope for improving the operational efficiency of unit owner assemblies through the promotion of alternative methods of voting such as e-voting. We suggest that governments should construct a sound legal environment for condominium administration and make housing prices more affordable, thereby increasing supply and reducing investment demand.

Do housing options affect child birth decisions? Evidence from Taiwan

This study aims to empirically test the effects of various housing options, which include renting, owning, living with parents/siblings, living in houses bought by parents and living in staff housing, on fertility decisions of families. This study uses micro-data obtained from the Taiwanese Panel Study of Family Dynamics (PSFD) surveys for the period from 1999 to 2007 to empirically test three hypotheses relating housing options to childbearing decisions. Using families living in rented houses as the control group, we find that homeowners have their first child at an older age, and families living with their parents or sibling become parents at a younger age. The results are robust and consistent after controlling for the district fixed effects and the marriage year fixed effects. We test the housing price shocks on the childbearing decisions for families who were married or bought houses during or after the housing boom period in 1987, and find that the asymmetric housing price effects on fertility decisions are correlated with the marriage event, but not the house purchase event.