[quote=“cyberguppy”]Taiwan’s interest rate policy won’t follow inflation. They skip to the tune of major central banks around the world which is to ensure you cash is worth nothing so you don’t save it but throw it at other assets hoping for a return such as property and stocks. They don’t give 2 sh%$s about inflation. It’s all about propping up the bubble and keeping the currency low (think of who the majority of voters are here in Taiwan - old money + business, not youth who are totally squeezed out the property market and can never enter without family assistance).
In Taiwan you have a generally overvalued stock market and house market that assumes i rates are low forever. If you buy insurance, the policies are priced in the same way (discounted with 1% interest rates). A very dangerous recipe for when the economy finally turns sour cos you have shot all your stimulus bullets.
i rates will go up when risk returns - when banks realize that property prices may actually go down. Their models are built on the last 30 years of data assuming it’s a one way bet and property never goes down. At that stage, the banks will be most heavily exposed, as will property developers. Here in bubble land -Sanxia, the developers have built grandoise buildings but in many cases, are holding out, not even selling cos they see it as a Long term investment. They aren’t selling so as to rig the market (tighten supply) further.
I suspect if property prices fall 5-10% nationwide, it will be enough to sink almost every bank’s balance sheets into the red. Will TW’s federal reserve bail them out when their books are underwater? That remains to be seen. Taishin bank almost sank in the last recession.
Buy property when there is blood on the streets, not when i rates are at record lows and every 3rd storefront is a real estate outlet like in my neighbourhood.
btw - yes there is plenty other housing supply out there. I bet about 50% of it is gargantuan crapfiend 1960’s concrete blocks with iron curtains up to 5 floors high that not any aspiring new buyer would ever dream of. That supply is tightly held by some cheesy speculator who doesn’t give a rats a$$ about how it disfigures the landscape and skyline and is holding out for another 10 years cos property only ever goes up.[/quote]
Talking about insurance, it’s very fortunate that Taiwanese are some of the worlds biggestsavers and keep blindly sticking money in insurance companies, otherwise they would have bankrupted years ago from legacy policies which paid out very generously upon reaching their term. Insurance companies are also a big part of what has kept prices so high, they own a lot of the development land and commercial buildings around Taiwan. They only got permission very recently to invest overseas…pretty crazy situation. A lot of the time it’s one insurance company selling to another, then they book the profits. Banks possibly loan the money at low rates to both the insurance companies (which they may own as a subsidiary) and also to the developers and the bankers make a good commission too. I wouldn’t be that surprised if they have a gentlemens agreement to buy off each other at regular intervals and to add increments of value! Everybody wins 
. All local financial companies trading with each other.
This is interesting.
chinapost.com.tw/taiwan/busi … prices.htm
[quote]Among the 76 bids tendered by construction firms, real estate developers, insurance firms, and financial institutions, Lih Pao Construction paid the highest price of NT$2.13 million a ping for a land parcel, eclipsing the previous record of NT$1.78 million set for a land lot near the Banqiao Railway Station in 1997.
The Farglory Group, one of Taiwan’s biggest construction firms and realty developers, was the biggest winner as its construction and life insurance companies snapped up five land lots totaling 3,700 ping with capital investment of about NT$6.5 billion in Xinzhuang.
The group already owns more than 6,000 ping of land in the same area.[/quote]
I’ve often thought it would be nice to own a bank, insurance company and construction company at the same time and have friends in government. It would also be a nice scheme to get premiums from local citizens to then use that as leverage to speculate on local real estate and then sell off the property back to the same citizens at inflated prices. It would be nice to have a bank to then offer low interest or low deposit down loans or no interest for 5 year loans to entice buyers to buy at said inflated prices. Virtuous circle, what could go wrong 
(If anybody is interested they can look up the story of Anglo Irish Bank, who had concocted a great scheme whereby they loaned money to their major debtors to buy back shares in the bank with the banks own money…ah finance)
realestate.ipe.com/news/investor … 75.article
hopes