Some were lucky to have bought their place (apartment or storefront) 30-40 years ago … or inherited it. Or got some land in [Taipei city] and got a place or more in the new developement.
Man, that’s terrible advice. 
Also, lots of wealthy people get mortgages to buy extra properties too, especially if they can borrow the money at low rates.
That’s the equation that people are currently using in Taiwan but it’s not sustainable long term. So far it’s working because prices have gone crazy but if the market merely flattened out for 5+ years then everything changes. It becomes even worse WHEN interest rates rise on these variable interest rate mortgages. At that point renting becomes necessary just to make ends meet.
Man, that’s terrible advice.
Also, lots of wealthy people get mortgages to buy extra properties too, especially if they can borrow the money at low rates.[/quote]
But backed by their money in the bank … or property they already own.
And about the rent … no other way to explain it. It’s the gambling spirit alive and kicking.
And I heard other stories too … like developers letting you the property through illegal means … backing you at the bank or something.
Man, that’s terrible advice.
Also, lots of wealthy people get mortgages to buy extra properties too, especially if they can borrow the money at low rates.[/quote]
HH, I don’t think he meant it as advice, but merely as a commentary on what passes for conventional wisdom on this rock.
I live in a very popular suburb of Taipei and my landlord needs 50 years of rent to cover her purchase price. And that’s lower than the average Price/Rent ratio for Taiwan. Compare that to Hong Kong’s 33 years and Japan’s 18 years, and you start understanding why Taiwan’s residential real estate market is set for a 40%-50% correction over the course of the next decade.
Link here: globalpropertyguide.com/Asia … rent-ratio
My landlords gross rental yield is 2%. That translates (after maintenance and taxes) to less than 1% return. Compare that to Japan’s 5.5% gross yield and Hong Kong’s 3%.
Link here: globalpropertyguide.com/Asia … ent-yields
IMHO, there are a few things that might cause this immense bubble to deflate quickly:
First, a global currency crisis (in which the US dollar might loose its function as reserve currency) leading to a major recession/depression globally and especially severe in Asia as Western demand for Asian products plummet. Remember 2008 in Taiwan? Unpaid furloughs for thousands, bankruptcies, and liquidity issues. And don’t forget mortgage defaults and the drop in housing prices back then.
Second, the China Experiment implodes. I mean, 7%-10% compound economic growth into infinity…that’s horseshit. Exponential growth peaks…and then reverses at an accelerated rate. It’s just a matter of time. I have never seen an exponential price chart that didn’t eventually crash. IMHO, China is getting very close to that reversal moment. It happened with Japan in the late 1980s; it will happen in China. I guess the question is, how many ghost cities can the government and their cronies build to shore up the numbers. My guess, not too many more. When it happens it will be a matter of, as the major regional economy goes, so goes the neighborhood.
I have an even bet on the above two scenarios playing out over the next decade, possibly next 6 years.
Does anyone see a different crisis heading our way with a big-ass needle?
The USD is in as strong a position as it has ever been, so countries in Asia may need to raise their interest rates soon to attract in flow of funds and to damp down inflation. Thats the opposite of the dollar bust scenario gold bulls were promoting for the last few years.
On the other hand, a strong dollar will help exports to the US from Taiwan.
But overall the strengthening dollar and improving US economy and growing population makes investing in the US a more attractive proposition than in Asia right now.
[quote=“headhonchoII”]The USD is in as strong a position as it has ever been, so countries in Asia may need to raise their interest rates soon to attract in flow of funds and to damp down inflation. Thats the opposite of the dollar bust scenario gold bulls were promoting for the last few years.
On the other hand, a strong dollar will help exports to the US from Taiwan.
But overall the strengthening dollar and improving US economy and growing population makes investing in the US a more attractive proposition than in Asia right now.[/quote]
Problem is, what will the US export? Raptopamine pork? iPhones? Cars? Their economy has stalled in that area. There is a bigger chance the Tesla will save them.
As to financial products, the Chinese are the ones buying like crazy. I mean, they just bought off the Waldorf, for Pete’s sake.
Sorry, just saw Colbert’s piece about the HK protests. 
I disagree with this mythical 30 million; it won’t happen. Taiwanese women are delaying or not even having children is a fact mirroring what happens in Japan. Add to the fact that there is a patriarchal society whereby a large amount of sons stay at home and live with their parents in a large family home with an extended family.
There are rumors circulating that the mainlanders are allowed to buy apartments here as a investment but that is just that, a rumor. I’m not sure how it is with HK residents .[/quote]
That puts a smile on my face. For its naivety.
Sure mainlanders are not allowed to, still they do.
Household size has much more to do with individual wealth than a certain from of society. Take a look at e.g. Japan’s development over time.
[quote=“Khrushchev”]
None of this excuses the vast amounts of apartments being built with supply far exceeding demand. It’s a simple matter of it being a buyers market and you can negotiate a good deal if you wish to buy.
The economist magazine did an article 3-4 years ago on the yields on a flat. It concluded that Taiwanese landlords get the worst deal on the planet after their counterparts in , wait for it, Monaco.
To sum it up, with out a vast influx of new residents on the island within the next 5 years there will be over supply of new homes with the developers taking a huge hit. It would also be worth remembering that the economic crisis which gripped the world for the last 7-8 years stemmed from the real estate. Thailand in the late 90’s and early 2000"s suffered a similar fate with an over supply of new (and luxury) apartments . The demographics of Taiwan don’t support such a frenzied supply of new developments. Spain is still suffering from huge developments that went sour.[/quote]
Thailand and Spain were in a very different position, building for tourism, not for residence.
People in Taiwan really like to save A LOT and are quite affluent. With household size getting lower, the urge not to live in the regular shitty building from the 60s, and mainland influx, anything in Taipei with a central location or direct MRT access or much beauty (e.g. Yamingshan) is a pretty save bet. Also including places like Taoyuan (the nice part), Linou etc. Some of the steepest prize increases, interestingly, are not even in urban Taipei, but north of Hualien all the way to Yilan and to a lesser extend south of Keelung.
Emm, prices always go up or down, just because they might not halve doesn’t mean they aren’t a poor investment , and the more you spend nominally the more you will lose even if it is just 20%. so that safe investment in Yangmingshan could cost an awful lot of money in real terms.
Always remember Japan, aging population in long term economic decline , still can maintain living standards…for the moment…until
they face a reckoning of their debt build up, in fact inflation is eating into their incomes right now.
Why are rents so low when costs are so high? How come many landlords take in less from their tenant than has to be paid on the mortgage?
The answer is simple: People can’t afford expensive rents on Taiwanese salaries. Rent can’t realistically go up if the landlords want to keep their tenants. Few people can afford NT$20,000 a month in rent when they make NT$36,000. So for property owners, it’s better to recoup a portion of your mortgage payments than being unable to find a tenant who will help you recoup all of it.
[quote=“Hokwongwei”]Why are rents so low when costs are so high? How come many landlords take in less from their tenant than has to be paid on the mortgage?
The answer is simple: People can’t afford expensive rents on Taiwanese salaries. Rent can’t realistically go up if the landlords want to keep their tenants. Few people can afford NT$20,000 a month in rent when they make NT$36,000. So for property owners, it’s better to recoup a portion of your mortgage payments than being unable to find a tenant who will help you recoup all of it.[/quote]
That’s not really it though. One reason is that home ownership is really, really high in Taiwan. And many that don’t own a home live with their parents because renting is considered a waste of money. the result is not enough renters to fill the empty apartments. Basic supply and demand.
Yep home ownership rates are really high, but recently there have been some cultural changes as people simply cannot afford to buy houses in many cases in Taipei, so they have to rent.
Whatever happens, rent won’t cost a lot because there are so many houses in Taiwan, and incomes are limited. The only times they’ll spend more on rent is for their kids, so they can live in the right school district, even then you need the co-operation of the landlord.
A few years ago there were over 1 million empty apartments … and still building new ones.
Yes and no. It depends on your metric. Official statistics that say something like 80+% of Taiwanese own a home are based on huji registration. Does somebody in the family own the home? Most likely, yes.
That does not jibe with this survey, which suggests that up to 80% of under-40s across the country do not own their homes.
Yes and no. It depends on your metric. Official statistics that say something like 80+% of Taiwanese own a home are based on huji registration. Does somebody in the family own the home? Most likely, yes.
That does not jibe with this survey, which suggests that up to 80% of under-40s across the country do not own their homes.[/quote]
Some families can own 4-5 houses each owned by another member of that family.
But what percentage of the population do you think is really that way?
Yeah the Huji thing can be really misleading.
If 10% of Taiwanese families have multiple properties how would this influence the % of Taiwanese that owns a property?
This is what I think too.
I remember visiting in apartment in a really shitty runned-down gated community area, and the apartment was only like 9 or 9.5 pings, and the landlords wanted 14,000. The apartment itself was like a room out of a crack house.
Undoubtedly, they would have kept that apartment on the market for a few weeks, and gradually knocked down the price little by little, until it came down towards something like half that price before they could get someone to take it. This is what I imagine happens, and why the rental yield is what it is at something like 1.8%.
Yes and no. It depends on your metric. Official statistics that say something like 80+% of Taiwanese own a home are based on huji registration. Does somebody in the family own the home? Most likely, yes.
That does not jibe with this survey, which suggests that up to 80% of under-40s across the country do not own their homes.[/quote]
The statistics may seem to disagree but it doesn’t necessarily mean that there are a lot of renters in that age group. The older generation especially has a sky high home ownership while large numbers of the younger generation live at home not paying rent. Effectively the own to rent ratio remains high.