2017 Asian Real Estate Society and Global Chinese Real Estate Congress Joint Annual Conference was launched in Taichung on July 9, 2017. The meeting gathered real estate experts from the academic, industrial and government sectors all around the world. Robert J. Shiller, winner of the 2013 Nobel Memorial Prize in Economics, delivered a key-note speech in the conference on “Understanding Asset Price Inflation for the Residential, Equity and Bond Markets”. He stressed that, in order to discover more and more possibilities for changing the status quo, people should pay more attention to the influences of the irrational factors on economic development. He was also deeply impressed with the beauty of the Taichung City and gave positive feedback to Mayor Lin Chia-lung for his views on city governance, saying that he believed Taichung had been moving toward the right direction.

In his speech on “Understanding Asset Price Inflation for the Residential, Equity and Bond Markets”, the Nobel Prize winner explained “asset price inflation” and analyzed the reasons of the high housing price in Taiwan from the perspectives of irrational economic factors, including psychological reasons, confidence, money illusion, phishing for phools and story-telling. The lecture attracted many domestic and international experts in real estate, both from the academic circle and other professions.

Dr. Shiller said that he was deeply impressed with the beauty of Taichung City and its clear skyline, and considered Taichung a highly livable city. He also gave positive feedback to Mayor Lin’s lecture in the conference, in which the Mayor explained his perception on city governance in Taichung and the actions taken to attract and retain talents. Dr. Shiller agreed that Taichung played an important role in Taiwan’s technology development. The growth of technology and industries are critical for keeping the talents in these fields. He mentioned that he used to live in Detroit, USA, a city suffering from population emigration due to the downfall of industries. He therefore spoke highly of Taichung’s efforts in creating employment opportunities and developing talents. These, he said, suggested that Taichung was moving toward the right direction.

Focusing on the “high housing price”, “high percentage of self-owned houses” and “high vacant rate” in the real estate market in Taiwan, he pointed out that these were also the issues faced by many other countries in the world. As an economist, he tried to explain these phenomena using different research methods, including theoretical evidences and models. Having been studying on these issues for many years, he recommended that people should expand the research methodologies to understand and interpret the current economic behaviors.

Dr. Shiller believes that people spend a lot of time talking, communicating and developing “Narratives”, which influence people’s interpretation on different phenomena. He provided an example, using the fluctuation of stock markets in Taiwan and the USA. In his view, factors other than the economic fundamentals are also important keys to determine the stock prices. In addition to objective facts or statistics, people are more likely to be influenced by psychological factors or the surroundings. Well-designed policies and rules will help reduce the influence of irrational factors and relevant price fluctuation. Cross-disciplinary sharing and cooperation is required to identify good research methods, which will lead to more and new findings in economic research.

Mayor Lin, in return, gave very positive feedback to Dr. Shiller’s analysis on economic behaviors and the concept about a dynamically changing world. The precise analysis and predictions made by Dr. Shiller, he said, were supported by strong theoretical basis as well as insightful understanding to human nature. Uncertainty does not suggest entire unpredictability. The methodologies provided by Dr. Shiller are of great help to relevant political decision-making.

When asked by the media about his views and recommendations on Taiwan’s economic situation, Dr. Shiller said that, with respect to the phenomenon of high housing price, Taiwan is not the only country facing the problem. Many other countries in the world need to cope with similar challenges. People should seriously look at the risk of rising housing price. As for the government, in addition to introducing relevant insurance programs, it also needs to consider the psychological and rational behavioral factors when seeking solutions. Transparency in government information will also help people make knowledge-based decisions.