schools' distort Taipei property
market By Jens Kastner
TAIPEI - Epoch-making educational reform
is predicted to leave its mark on the Taipei City
property market. In 2014, Taiwan's nine-year
compulsory education will be extended to 12 years,
and junior high school students will no longer
have rigid entrance exams for senior high schools
- it will all depend on their house address.
Instead of test scores in combination with
household registration in desirable school
districts, only the latter will determine the
school that students get into. This, along with
the huge faith ambitious parents put in the
performance of so-called "star schools", has
caused dramatic rises in house prices and rents in
the catchment areas of the best schools.
In February, President Ma Ying-jeou
promised that by 2014 all of
Taiwan's vocational and
private high schools, as well as all public
schools, would be entirely tuition-free. Students
will also be able to gain admission to all but the
most prestigious high schools - the "super-star
schools"- without having to take an entrance exam.
However, students' addresses will count.
By 2014, the ratio of exam-free enrollment based
on household registration to admittance by
entrance exam is expected to be 75:25, while by
2020, it will likely reach some 85:15, Minister of
Education Wu Ching-ji said recently.
property boom caused by low interest rates on
mortgages and warming trade ties with mainland
China was already underway, with house prices
rising 12.2% last year.
The star school
phenomenon has only heightened the buying fever.
According to a survey by the Taiwanese real estate
portal HouseFun, the prices of apartments near
sought-after institutions as the Taipei City First
Girls' Senior High and the Affiliated Senior High
School of National Taiwan Normal University, rose
by as much as over 100% over the past five years.
These houses are not even the
pre-construction or new homes normally popular
with homebuyers, let alone the luxury residential
property in which investors from the mainland are
interested. HouseFun predicts that "the star
school phenomenon will only be more obvious once
Taiwan implements 12-year compulsory education
starting in 2014".
Often the reputation of
star schools is built solely on word of mouth.
"In Taiwan, all you need is a few
so-called experts or proud parents saying the
school is good because their own children's
teachers, test results or both were exceptional.
Other parents rush to find a coveted address near
that school," Mo Reddad, a lecturer at I-Shou
University and commentator on Taiwan educational
affairs, told Asia Times Online.
my daughter ranked between first and third in
grades one and two, a friend insistently asked
that she use our address," Reddad said, adding
that though his daughter subsequently ranked fifth
to 12th in grades four and five, his friend still
sent her daughter to the same school. "The status
of the school was established in her mind simply
because of one illustrious child," said Reddad.
One Taipei economist points out that the
star school phenomenon is nothing new. He
nonetheless says the problem will become more
pressing, before reaching a climax shortly before
and after the implementation of 12-year compulsory
"The phenomenon of high house
prices near good schools has always existed. But
regarding senior high schools, the trend has
increased in recent years," said Hu Sheng-Cheng, a
professor at Academia Sinica's Institute of
Economics. "In the past, enrollment depended
entirely on exam results and household
registration didn't matter. At that time, although
rents and home prices near star schools were
higher than in ordinary areas, the difference
wasn't huge," said Hu.
"Many parents from
elsewhere simply bought or rented an apartment
near the school to get an address for their
children in order to gain admittance. But although
those people obtained the desired address, in many
cases they didn't bother actually moving there,"
said the economist.
Home prices in Taiwan,
particularly in Taipei City and New Taipei City, a
suburban area on the outskirts of the capital,
have spun out of control in the past 10 years,
with the property market surviving the global
financial crisis unscathed. Housing prices are
said to be at least 13.2 times the average
household income in Taipei City, with mortgage
payments taking up 54% of disposable income. The
issue of high housing prices has naturally become
Under fire, the ruling
Kuomintang (KMT) in June implemented a "luxury
tax" to end property speculation. The regulation,
which imposes a 15% tax on properties resold
within one year of purchase and a 10% tax if sold
within two years, led to a correction that seems
to have been short-lived. While home costs dipped
a modest 3% last month, in early August, major
realty companies noted a 0.5% rise month-on-month.
Economists agree that a market they assess
as "unhealthy" does not need further distortion
created by thousands of anxious parents buying up
houses in some 80 catchment areas of Taipei's star
However, Hu doesn't see the
problem as that dramatic, and predicts it could go
away on its own.
"Taiwan's graduation rate
is very high, the birthrate is very low, many
mediocre universities are thus being eliminated,
and a growing number of parents send their kids to
schools abroad anyway. This means Taipei's star
schools will eventually end up shedding a good
deal of their significance," Hu said.
Jens Kastner is a Taipei-based
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