In Japan, following the real estate bubble burst in the 1990s, a paper published by the Asian Development Bank Institute found that “allocating too much capital into real estate can also damage growth of small-to-medium-enterprises (SMEs), the backbone of the economy, as banks allocate more credit to the construction and purchases of real estate rather than SMEs.”
In Taiwan, excessive speculation might also cause the housing market to burst. According to Lee Ming-hsuan (李明軒), professor of political economy at the National Sun Yat-sen University, the average effective property tax rate is only 0.12%, which she explained is “a burden far below that seen in the world’s major cities.” At the same time, Taiwanese homeowners pay property taxes that are just one forty-eighth of the amount their American counterparts pay for housing of similar price and age.
