Will there be a drop in housing prices?

Taiwan Living in Taiwan
1

So I came across this article and was wondering if anyone thinks the writer is making a valid point: taoyuan-nights.com/archives/220

It seems to me he’s saying that housing prices have been overvalued. Hence there’s somewhat of a real estate bubble. The analogy of how property prices have risen disproportionately to salaries kinda convinces me. But I’m not experienced and don’t any property (but might make push to save more/faster if I can buy low in the next couple of years).

Just curious to know what others think about this.

2

Well I hate to tell everyone and all the estate agents that “I told you so,” but I did and property prices in Taiwan have fallen for the past three months now, which it seems no estate agent but one were able to predict, or perhaps they were just fooling themselves.

House prices down: stock turmoil, higher rates

I did get the timing slightly out however as I predicted the end of 2008 would see the first drops, on the back of increased debt and the inability for most families to take on more.

This is a long time coming for Taiwan and a deserved correction. People have been gabbing about how links with China will sell houses to the rich elite, but nobody seems to appreciate that there’s not much point in purchasing a house here when you can only live in it for thirty days under present restrictions to the majority of Chinese visitors. That and the simple fact that not enough rich business Chinese to support the housing market would be able to physically go to and from local airports without causing stoppages.
It’s a good thing that rich Chinese are inhibited from purchasing property here anyway. For some odd reason Taiwanese were joyful at the hopes of fresh investment into the housing sector to raise prices, but it would inevitably be Taiwanese first in this case who would be priced out, and unable to make first time buys.
So it seems to me foolishness has been key to maintaining fresh hope for Taiwan’s future market rises, and not realism.
Hopefully prices will continue to fall, allowing new first time buyers into the market, as well as reduce the financial pressures many families have been forced into in the long term.
It may also be a wake up call to locals that property is best suited as a habitat, not a stock market commodity.

3

I do wonder whether this is just a greater Taipei phenomenon (or maybe a Big City phenomenon) - prices in (for example) Tainan City seem pretty reasonable. A few months ago I saw brand-new one-bedroom flats (not studios) on Gongyuan South Road going for under a million, with parking. Doesn’t sound inflated to me, considering Tainan salaries. Though a big correction even just in Taipei would be nice for those of us who wouldn’t mind getting on the property ladder.

4

Great info sulavaca!

[quote=“sulavaca”]
For some odd reason Taiwanese were joyful at the hopes of fresh investment into the housing sector to raise prices…[/quote]

It’s like the ones that are already “in” the game want theirs to keep going up.

[quote=“sulavaca”]
So it seems to me foolishness has been key to maintaining fresh hope for Taiwan’s future market rises, and not realism.[/quote]

Ah yes, the 1-step ahead vs. the 3-step ahead approach. I’m not much of an forecaster, but it would seem that having a steady long-term raise in housing prices would be more attractive than a quick run to the top.

[quote=“sulavaca”]
Hopefully prices will continue to fall, allowing new first time buyers into the market, as well as reduce the financial pressures many families have been forced into in the long term.
It may also be a wake up call to locals that property is best suited as a habitat, not a stock market commodity.[/quote]

Amen to that! I’d consider making a long(er) stay in Taiwan I felt that an investment in property would provide adequate financial stability. Maybe for many Taiwanese they don’t have much of a choice (or if they do they already made it) but as a foreigner with other options out there it does make me think.

For example, do I try and wait and buy in Taiwan at the bottom of the cycle here, or try and do the same in the States? Not sure if that’s a decision I will soon need to make, but it is certainly something that crosses my mind.

5

If I were you and didn’t mind where I ended up living, I would go with the states. Americans generally have a much more predictable business environment and housing cycle. Taiwan has typhoons, earthquakes, stock market crashes and Chinese to contend with, let alone its own political misgivings. All which make any long term investment a potential powder keg waiting for just the right spark.

Money for money, again I don’t understand where the value is in a Taipei property as opposed to an equally expensive property in the states, Europe, Australia, New Zealand etc either. It’s always baffled me as to why certain properties are so sought after here. I could pay the same back home in the U.K. and have a place three times the size with no cockroaches, binlang spit, 30 years of built up crud on every surface, stray dogs, dangerous traffic and rude people. Then again, I probably wouldn’t have a 7-11 though.

Of course there are much more beautiful places around Taiwan than Taipei, but again I wouldn’t fancy daily conversations about turnips or the rising price of kaoliang for the rest of by life.

6

[quote=“sulavaca”]
Money for money, again I don’t understand where the value is in a Taipei property as opposed to an equally expensive property in the states, Europe, Australia, New Zealand etc either. It’s always baffled me as to why certain properties are so sought after here. I could pay the same back home in the U.K. and have a place three times the size with no cockroaches, binlang spit, 30 years of built up crud on every surface, stray dogs, dangerous traffic and rude people. Then again, I probably wouldn’t have a 7-11 though.[/quote]

Yep. Money for money, pound for pound, there’s more to get overseas. No 7-11? It’s okay cause you could plant a garden or something. :slight_smile:

[quote=“sulavaca”]
[/quote]

Nice pic, it reminds me of the time I visited Worcestershire, nice rolling hills and probably great bike riding trails…but only when it’s sunny! :slight_smile:

So anyone care to share why they decided to invest in Taiwan’s property market? I guess it would definitely be more interesting* to live here long term. I’m sure there are valuable reasons (family, steady growth, Mandarin) that have prompted others to “take the plunge”.

*Interesting…that’s the adjective I hear most when people first visit Taiwan.

7

I am currently actively looking to buy a new place because (a) we need somewhere bigger and (b) we want to live closer to the parents-in-laws and sisters-in-law, so they can help us look after our baby. So we’re looking to move to Linkou from Sindian.

Yes, Linkou is a nasty shithole, while Sindian is as good a place to live as anywhere in Taipei County, and before the baby came I wouldn’t have considered such a move even if I’d been offered a free house in Linkou. But the baby makes all the difference.

Now Linkou is currently undergoing massive development, with literally hundreds of new housing projects going up on a large flat expanse of what used to be agricultural land. It’s going to have a couple of MRT stations a few years ahead and, with some half-decent urban planning, might be quite an acceptable place to live when all the development is done - though still far inferior to Sindian and many other parts of Taipei County.

We’re ideally looking for one of those new row houses with good security in a quiet area away from the main roads. They do exist, because the parents-in-law and one of the sisters-in-law both live in prime examples, and having stayed in both, I’d be quite happy to live in either. Unfortunately, those places are very hard to come by, and the prices are prohibitively high, running from the low-teen to high-teen millions for about 70 ping. We’re still hoping we might find a 50-odd ping one for about 9 million, but those are few and far between.

So we’re also looking at apartments, and have been visiting various of these new projects (either newly finished or still under construction) each Saturday when we spend the day with the in-laws. But the prices they’re asking just seem so nonsensical, totally out of touch with reality. For very basic, fairly cramped, 3-bedroom places with an underground parking space, we’ve been quoted prices of 11 or 12 million - sans interior decoration! Considering that there are tens of thousands of these new homes looking to attract buyers, I just don’t see how they can possibly hope to sell them at such prices. How can there be that many Taiwanese with that much money to spend on very ordinary smallish apartments in such a location? We’re talking about US$400,000 - and even in the bubble markets in the US, UK and elsewhere, you can still buy something a hell of a lot better than these apartments for much less than that. The only one that was more or less acceptably priced was a 44-ping place which, after deduction of the 25%+ public space, had about 32 pings of interior space, and was available for about NT$7 million, including a parking space. Unfortunately, it faces onto a busy road, is diagonally across from a petrol station, and is surrounded by empty sites where more high-rises are going to be built over the next couple of years - so absolutely not the kind of environment I’m looking for.

When I agreed with the wife that we’d look for a place in Linkou, I set a maximum budget of NT$9 million, fully expecting to be able to find either a fairly nice place for much less than that or a very nice place for that full amount. I can hardly believe that it’s difficult to find a modest little home for US$300,000 in as unappealing a place as Linkou.

So I, for one, will be really strongly hoping for a major downward correction in these absurdly inflated housing prices.

8

It’s odd, I don’t know if its relavent, but I just heard on ICRT that 32 percent of Taiwan’s men feel they don’t want to have kids because they don’t believe in the Taiwan education system as valuable to children. Now I’ve always been of this opinion although I’ve heard foreigners say they hink their kids should at least learn about their island’s culture through its education system.
Does this make a difference to foreigners thinking of long term root setting?

I’ve also been interested in gaining an understanding of the broad long term ex pat’s opinions of living here, as judging by my close circle of friends, it seems the longer they live here, the more they wish to eventually leave.
Am I right in assuming that foreigners who have stayed for shorter than 5 years tend to have ambitions of staying here longer than the longer term, more experienced ex-pat? It also seems to me that Americans find Taiwan more acceptable than Europeans, or perhaps I’m being snobby?!

9

I bought my place 4 or 5 years ago for over 3 million, saw an ad recently for the same apartment (different floor) for almost 6 million. After reading that article, I’m glad I got a fixed interest rate on my loan, though, so I don’t have to worry about rising interest rates, at least.

10

[quote=“Omniloquacious”]I am currently actively looking to buy a new place because (a) we need somewhere bigger and (b) we want to live closer to the parents-in-laws and sisters-in-law, so they can help us look after our baby. So we’re looking to move to Linkou from Sindian (Xindian).

Yes, Linkou is a nasty shithole, while Sindian (Xindian) is as good a place to live as anywhere in Taipei County, and before the baby came I wouldn’t have considered such a move even if I’d been offered a free house in Linkou. But the baby makes all the difference.

Now Linkou is currently undergoing massive development, with literally hundreds of new housing projects going up on a large flat expanse of what used to be agricultural land. It’s going to have a couple of MRT stations a few years ahead and, with some half-decent urban planning, might be quite an acceptable place to live when all the development is done - though still far inferior to Sindian (Xindian) and many other parts of Taipei County.

We’re ideally looking for one of those new row houses with good security in a quiet area away from the main roads. They do exist, because the parents-in-law and one of the sisters-in-law both live in prime examples, and having stayed in both, I’d be quite happy to live in either. Unfortunately, those places are very hard to come by, and the prices are prohibitively high, running from the low-teen to high-teen millions for about 70 ping. We’re still hoping we might find a 50-odd ping one for about 9 million, but those are few and far between.

So we’re also looking at apartments, and have been visiting various of these new projects (either newly finished or still under construction) each Saturday when we spend the day with the in-laws. But the prices they’re asking just seem so nonsensical, totally out of touch with reality. For very basic, fairly cramped, 3-bedroom places with an underground parking space, we’ve been quoted prices of 11 or 12 million - sans interior decoration! Considering that there are tens of thousands of these new homes looking to attract buyers, I just don’t see how they can possibly hope to sell them at such prices. How can there be that many Taiwanese with that much money to spend on very ordinary smallish apartments in such a location? We’re talking about US$400,000 - and even in the bubble markets in the US, UK and elsewhere, you can still buy something a hell of a lot better than these apartments for much less than that. The only one that was more or less acceptably priced was a 44-ping place which, after deduction of the 25%+ public space, had about 32 pings of interior space, and was available for about NT$7 million, including a parking space. Unfortunately, it faces onto a busy road, is diagonally across from a petrol station, and is surrounded by empty sites where more high-rises are going to be built over the next couple of years - so absolutely not the kind of environment I’m looking for.

When I agreed with the wife that we’d look for a place in Linkou, I set a maximum budget of NT$9 million, fully expecting to be able to find either a fairly nice place for much less than that or a very nice place for that full amount. I can hardly believe that it’s difficult to find a modest little home for US$300,000 in as unappealing a place as Linkou.

So I, for one, will be really strongly hoping for a major downward correction in these absurdly inflated housing prices.[/quote]

Good lord, Omni, that’s an absolutely daft idea on all levels. You love where you live and the quick access to the rivers and mountains is a great source of joy for you every day. You want to share that joy with your new child. Moving to Linkou is going to make you unhappy, which is not good for the child, to say nothing of her missing out on forming a deep bond wiht nature at the earliest times possible.

In addition, Linkou is a shithole as you say and the KMT in their wisdom are expanding the coal generators out there which means even more air pollution. How can a shithole with bad air, far removed from nature, be a better place to raise your child?

11

Of course you’re absolutely right, MM, and it will be a great sacrifice for me. But it’s really important for the wife to be close to her family so they can help her look after the baby and she can do her work. I reckon I can just about bear to live in Linkou if I can find the right kind of home there. And maybe I’ll be able to find some places like Wulai or Pinglin within easy driving or riding distance, though from what I’ve seen of Linkou and its surroundings thus far, I rather doubt it. Ideally, I’d like to just rent a place there, keep my home here in Sindian, and divide my time between the two - but the wife doesn’t think much of that, as she reckons it’d waste too much money. Maybe I’ll work on that and see if I can prevail with it in the end.

Oh, the burdens of being married, and the infinitely greater burdens of being a parent!

12

If house prices are falling, then why invest in a place you don’t want or maybe don’t intend to live in long term. I could deal with negative equity, if I was living in a place I really liked.

And selling your place in Xiandian. Looks like you taking a risk and sacrifice to enable your kid to be taken care by the grandparents.
Hsin Tien to Linkou… commute say 40 mins each way… Why not drop the baby for a couple of days during the week

13

First he traded his stroll through the mountains for a walk in the mall looking at baby strollers . . .

:laughing:

HG

14

Saw on CNN the other day that some analysts say the US real estate prices have only dropped halfway and that prices will drop by another 20% in the coming months. If that’s the path that Taiwan’s following, then I’d say, hang on to your cash and keep waiting a while before you make any offers.

15

My air conditioner guy–lol–saw it coming a couple of months ago. Guess I need to call him and ask what happens next. There wouldn’t seem to be much happening to push a rebound anytime soon though.

16

A real estate agent I am friends with was telling me that the place they are building near my house -right behind the MRT- will wait until completion to start selling the units. He says at this moment, it is hard to tell whether the prices will rise, and up to where, or maybe even drop, so the owners decided -against common practice- to wait two years until it is completed. Interesting.

Back home, the property bubble is reaching such prices even druglords with loads of cash are complaining. Hundreds of thousands of dollars for city properties, not even beachfronts. I don’t know what they are thinking, but it really makes life miserable for the common folk.

17

I was thinking much the same. All around they build new homes, from houses to appartments. There are hundrets of houses and also lots of appartemts just going up here in Longtan, some projects finished and they are almost completly empty, still they keep on building.
On the way to Taipei you pass constructions sites in Daxi, Sanxia (well thats related with the move of the university, but if they move there should be tons of free space than in Taipei), and so on. Shilin and Danshui area is lots of construcion too and if you go over Linkou back its the same. Who the hell should buy all that and further more who should live in that? The poulation will stay on that level or shrink, gates to China wount open like that either so it’s quite simple answer if you add the not so roaring economy. Or are they all getting devorced and need double amount of appartments or something?

18

Construction companies plan many of their builds up to 15 years in advance of beginning which is how long it can take up to, to get the landlords of preexisting properties to settle and sign over. Its a task and a half by which time they have already invested millions of NT, so a short coming in the housing sector can be looked at as just a bump in the road by some companies and they see the long term paying off which is why they tend to go on building anyway. Of course there are also many every year which go bankrupt too buy building in the wrong place or investing on the wrong area. Foreseeing the future of residential areas is a bit of an art, or perhaps a big red envelope in the pocket of the right informant or policy changer (which is usually the case). One only needs to go to some of these ground openings to see the very politicians that have taken backhanders to know what and whom is evolved.

19

[quote=“sulavaca”]It’s odd, I don’t know if its relavent, but I just heard on ICRT that 32 percent of Taiwan’s men feel they don’t want to have kids because they don’t believe in the Taiwan education system as valuable to children. Now I’ve always been of this opinion although I’ve heard foreigners say they hink their kids should at least learn about their island’s culture through its education system.
Does this make a difference to foreigners thinking of long term root setting?

I’ve also been interested in gaining an understanding of the broad long term ex pat’s opinions of living here, as judging by my close circle of friends, it seems the longer they live here, the more they wish to eventually leave.
Am I right in assuming that foreigners who have stayed for shorter than 5 years tend to have ambitions of staying here longer than the longer term, more experienced ex-pat? It also seems to me that Americans find Taiwan more acceptable than Europeans, or perhaps I’m being snobby?![/quote]

Sorry to say it mate, but I think you’re starting to contract Poisonous Expat Syndrome. I used to hang around fellow Europeans and complain endlessly about x, y and z which just got me more and more worked up. Now I make a conscious effort not to do that and the longer I stay in Taiwan the more comfortable I get. Leaving blighty was the best decision I ever made.

I just bought a house in Taichung County and the land was overpriced, but when all the interior design, western style fittings etc. are done it adds up as a pretty nice deal. Going past basic sale prices and avoiding the ridiculous parts of Taipei (or even Taichung) city, the total cost of housing ownership in Taiwan can be quite reasonable. Tax, decoration, insurance, repairs etc. are all much cheaper than the UK.

20

I recently visited Tai-Jong and was really impressed. It has really come on leaps and bounds since only a few years ago. It is much more value for money living in Taijong, only they don’t have a European school for my boy.